I want to revisit the topic of Scrypt ASICs. The reason for this is two-fold: first, mining income from Scrypt mining with GPUs is basically at (or just above) the break even point right now for most of the major coins, and that's only if you happen to have someone inexpensive power. Second and perhaps more importantly, Alpha Technologies sent out an email stating they are now entering the final 60 days of development on their Scrypt Viper ASICs, and thus the call has come for the final 70% payment from those that pre-ordered. As I mentioned a while back, I went in 50-50 with a good friend on one of the then-25MH Viper ASICs, and while I was nervous I figured it was worth the chance.
The payment request is sort of a good news/bad news scenario, unfortunately. The good news is that the ASICs are nearly done, right? The bad news is that some of the stuff surrounding the final couple of months is sounding all too familiar to me. I remember the Butterfly Labs fiasco, and while they did eventually ship the products and they delivered the expected/promised performance, it took so much longer to ship that even the somewhat early orders basically got hardware that hardly mattered on arrival. Today, 5GH of SHA256 hashing power is practically worthless, and even with power requirements of "only" 40W or so (which is a far cry from their earlier target of <5W), at the current difficulty level you would net around $2 per month.
The reason I mention Butterfly Labs is that, despite better communication, Alpha Technologies is basically unproven as far as cryptocurrency mining hardware is concerned. And what really makes me nervous is that they've gone from 25MH to 90MH (5 to 18MH on the lesser Viper), and now they've pushed the limits of credibility by promising 250MH (50MH for the small Viper)! I don't want to look a gift horse in the mouth, but we're now talking about a 10X increase in performance over the initial specs, all "due to increased competition". The competition of course comes from various places: KnCMiner, a company that has at least proven capable of delivering SHA256 ASICs in quantity, is offering 300MH for $10000. That's good but other companies are already shipping, including Gridseed (from various sources), Innosilicon, and Zeusminer.
While it's possible that A-Tech has managed to improve performance dramatically, much of the increase comes from trimming "extra" features like an integrated LCD display and doubling the number of ASICs instead -- all with a higher power requirement and a larger chassis of course. Ultimately they are giving away a lot of "free" extra performance to batch one customers. If they deliver that will generate a lot of good will, but there's a second possibility. Let's assume you have a bunch of preorders, and you've been paid a lot of money but still have costs and you need to get more money to finish the project. What do you do? Well, you can't really tell your customers, "Oops...we underestimated our initial costs; please pony up so we can finish!" So instead you tell them that you're "nearly ready to ship -- please remit the final 70% of your payment." And to further entice everyone to pay as quickly as possible, you then nearly triple the promised performance of a product where you already increased performance by 3.6X!
I really, really hope that they aren't going to disappear into the night with all the money from their customers, but let's be real: it wouldn't be the first time something like that happened in the world of cryptocurrencies! The size and power requirements of course have jumped, so what was going to be a 1U 25MH system became a 4U 90MH system, and now it will apparently be something like an 8U 250MH system... and it will require nearly 2000W (via three 750W PSUs last I heard)! It's a gamble still, as are all of the other non-shipping Scrypt ASICs, and if I lose it will hurt -- but thankfully income from other cryptocurrencies has basically got me covered.
Now with that all out of the way, let's talk about the performance and cost of running these Scrypt ASICs compared to standard GPU mining. This is why Scrypt GPU mining is about to die (assuming the ASICs are actually delivered). We'll start with my standard mining rig (3xR9 280X), then look at the ASICs from Gridseed, Innosilicon and Zeusminer (these are shipping; Gridseed is readily available, and the other two are both shipping as well now), and wrapping up with Alpha-Technologies and KnCMiner (not shipping yet).
Graphics Mining (3x280X):
Hash Rate: ~2.1MH
Power: ~750W
Price: ~$1500 for a complete system
Efficiency: 2.8KH per Watt
Daily Income: $2.60 (LTC)
Power Cost: $1.80
Gridseed Specs:
Hash Rate: ~70KH per chip, 300KH per "mini USB miner"
Power: ~1.3W per chip, ~7W for mini USB (~60W if hashing 9GH SHA256 as well)
Price: $1079 for a 5.2MH 80-chip blade that draws 140W
Efficiency: 37KH per Watt
Daily Income: $6.47 (LTC)
Power Cost: $0.34
Innosilicon A2:
Hash Rate: 86MH
Power: ~550W (?)
Price: ~$12000 for a complete system
Efficiency: 156.4KH per Watt
Daily Income: $107 (LTC)
Power Cost: $1.32
Zeusminer Thunder X3:
Hash Rate: ~28MH
Power: ~1050W
Price: ~$3100 (no PSU?)
Efficiency: 26.7KH per Watt
Daily Income: $35 (LTC)
Power Cost: $2.52
A-Tech Viper (250MH):
Hash Rate: 250MH
Power: ~1900W (?)
Price: ~$10000 for a complete system
Efficiency: 131.6KH per Watt
Daily Income: $312 (LTC)
Power Cost: $4.56
KnCMiner Titan:
Hash Rate: 300MH
Power: Unknown? (1500W?)
Price: $10000 (no PSU)
Efficiency: 200KH per Watt
Daily Income: $373 (LTC)
Power Cost: $3.60
So first things first, in terms of efficiency even the Gridseed ASISs are about 13x what you'll get from a good GPU mining rig. The Zeusminer is actually the least efficient ASIC and it's still 10X what you'll get from GPUs. Move to the Innosilicon and A-Tech and we're looking at around 50X better efficiency, while if my power guess on the Titan is accurate we're talking over 70X more efficient mining compared to GPUs. When these ASICs arrive en force, GPU mining for Scrypt basically dies, and it will die fast. The only "good" news is that the initial ramp up in production means it will take a bit longer before things really escalate, and as I've mentioned in the past, GPUs can still be used for other algorithms -- Scrypt-N, Scrypt-Jane, X11, X13, etc.
There's another aspect we need to discuss, of course: how long to recover your investment with these ASICs? Well, assuming income remains constant (which is way better than any realistic best-case scenario), we're looking at nearly six months for the Gridseed, 113 days for the Innosilicon, 95 days for the Zeusminer... and if it really delivers, only 32.5 days for the Viper 250MH! KnC Titan would be the best result of course, given it's the highest hash rate, paying you back in around 27 days, but we're still likely three or more months away from the Titan shipping. Of course, by the time the Viper and Titan ship, I suspect profitability of Scrypt mining might be down another 50% or more, but even if it's 60 days to break even I'll be quite happy.
The only problem is whether or not the darn things actually ship in July (or 2014 if they pull a Butterfly Labs). Let's just hope that doesn't happen.... And if you didn't take a chance on a Scrypt ASIC six months back, now you can be sad... and glad at the same time that you're not out $10,000 and wondering whether you'll actually receive the promised hardware -- on time or perhaps ever.
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In-depth testing and reviews of graphics cards and related technologies, focusing on performance across numerous generations of hardware. Gaming benchmarks galore, plus AI and professional testing on occasion, to show the best value GPUs right now.
Showing posts with label LTC. Show all posts
Showing posts with label LTC. Show all posts
Friday, June 6, 2014
Thursday, May 29, 2014
Litecoin Specifications
Litecoin Specifications (5/29/2014)
| |
| Symbol | LTC |
| Launch Date | 2011-10-08 |
| Proof of Work | Scrypt |
| Starting Difficulty | 0.00024414 |
| Block Time | 2.5 minutes |
| Block Reward | 50 |
| Difficulty Adjustment | 2016 blocks |
| Reward Adjustment | Halving every 840,000 blocks (~4 years) |
| Max Coins | 84 million |
| Block Explorer | Yes (with several alternates) |
General Points of Interest:
The initial starting difficulty of Litecoin was far too low, resulting in "instamining" -- instead of blocks coming on average every 2.5 minutes, after the genesis block and block 1, Litecoin was released to the public (sort of) and blocks started coming at a rate of several per minute. The real start of LTC occurs on 10/13/2011 at 02:59:41; from block #2 until block #10079 the total time is only about one day. The target rate for LTC should generate 576 blocks per day on average, which means the first day of mining was about twenty times too fast! Day number two of mining the difficulty started to catch up, and only 850 or so blocks were found. Some considered this an early form of pre-mining, but it's not clear whether it was intentional or not. Unfortunately, many coins clone and only slightly modify the LTC base code, which means the starting difficulty is still far too low, and the rate of difficulty adjustment is so long that the first hours of poorly launched LTC-clones can be horribly chaotic.
LTC's Proof of Work (PoW) hashing function was changed from BTC's SHA256 to Scrypt. (Side note: I've heard it pronounced "S-crypt" as well as "script"; I usually say the latter, just because it's one less syllable, but I believe "S-crypt" is correct -- as in "secure cryptographic hashing function". And it's usually not capitalized, but I'm going to capitalize it going forward because it makes sense to consider Scrypt a proper noun.) One goal of Scrypt was to prevent the use of GPUs, FPGAs, and ASICs from taking over. The reasoning at the time was that every computer has access to a CPU, whereas GPUs are more specialized and FPGAs/ASICs are even more so. If you want a truly decentralized network that can be run on as many systems around the world as possible, limiting it to CPUs should better achieve this result.
The first demonstration of Scrypt mining came within months (and some people may have even created them within weeks and held a mining advantage until public availability of GPU Scrypt miners occurred). Despite concerns of GPUs taking over and "killing" Litecoin, however, LTC continued to grow. Now ASICs for Scrypt are available, with significantly faster ASICs coming in the very near future. Will these kill off Litecoin? The LTC developers have weighed in on the subject, and their arguments are quite compelling: the answer is "no".
While GPU/ASIC-resistance was an original goal that has since been abandoned, a more important goal was faster confirmation times than BTC. With six confirmations being required and a block target time of 10 minutes, that means you need to wait about an hour to really "know" that you have received valid BTC. Even if a site decides to accept a transaction as valid after three block confirmations, that's still 30 minutes. LTC took the same core structure as BTC but cut the time required to confirm down to 15 minutes on average. Other coins have tried even faster confirmation times, but there are drawbacks to such approaches that I'll get into later.
Ultimately, then, Litecoin is arguably the next best coin to BTC in terms of overall volume and future outlook. It keeps all of the good, fixes a few problem areas, and it has been around long enough that few people expect it to fail. I'd go so far as to say that if Litecoin fails, cryptocurrencies in general are not far behind. That's not to say LTC is without problems, however.
The biggest problem now is that with hundreds of Scrypt clones out there that build off the core design of LTC, miners have a lot of incentive to switch coins if the difficulty/price ratio of a coin isn't very good. Up until about November 2013, this wasn't really a problem, but that's when the clone-coin phase of alt-coins really kicked off. With new coins appearing daily, jumps in LTC mining difficulty often put it at a profitability disadvantage for miners, so many will switch to a new coin until the next difficulty adjustment occurs. Then they all jump back on LTC until difficulty changes again, so you get a period of higher profitability followed by a period of lower profitability. The good news is that long-term, many/most of the clone coins are fading away, leaving mostly the "good" clones that are worth mining.
Looking forward, with high-performance (>100MH) ASICs coming in the July 2014 time frame, difficulty of Scrypt coins is going to jump probably 50X over the coming year. Such powerful ASICs are less likely to be used in pool hopping, simply because time spent not mining is time wasted, and dealing with dozens or more wallets can be extremely cumbersome. Multipools will pick the "best" coins and even auto-exchange those coins for BTC (or LTC, DOGE, etc.), and when the dust settles LTC will certainly be one of the Scrypt coins left standing.
In terms of price, LTC started a bit slow but quickly ramped up into the $5 range in April 2013, before falling back to $2-$3 for most of the remainder of 2013. Then in November 2013 we saw the first major bubble of LTC, taking the price from a low of $1.11 in October to a high of just under $50 in late November. Since then, the price has generally stayed above $10, with the lowest spike down being $7.90 in April 2014. Difficulty meanwhile started to see-saw around November 2013 but has lately resumed upward momentum. LTC is at a current all-time high difficulty of 8550, and I expect it will eclipse 10,000 before the end of June 2014.
Despite the overall positive outlook, mining LTC with GPUs however is now a questionable proposition; at $0.10 per kWh, roughly 75% of the gross income from mining would need to go to power costs. On the other hand, even the early Gridseed Scrypt ASICs will only use about 4% of the gross profits on power costs (though you still have to pay off the ASIC hardware, of course). But that's only looking at the short term.
My personal opinion -- do with it what you will -- is that Litecoin will continue to follow the pattern of Bitcoin. We saw a big bubble in LTC price last November, where the value went up around 25X in less than a month. If you can manage to mine and hold your LTC for the long term, we should see LTC prices top the previous high of $50 some time in the coming year. If you have confidence in the idea of cryptocurrency, buying LTC at the current $10.50 or so each would be a great longer-term investment. We will in all likelihood see lower prices before we see higher prices, but when BTC eventually passes the $2000 mark LTC will be following right along at $40+.
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Thursday, March 27, 2014
ASICs vs. GPUs, March 2014 Update
Last week I found what I felt was a reasonable
deal on a Bitcoin ASIC, so I decided to give it a try and bought a
couple Bitmain
AntMiner S1 ASICs. Each is good for 180GH/s SHA256, or when
overclocked around 400GH/s combined. At a price of about 1BTC each, I thought
it was worth a shot. Now I'm thinking I may be lucky to break even.
Let me run some numbers for you.
Lately, like since about March of 2013, Bitcoin has been pretty consistent about increasing in difficulty by 20% or so every 12 days. In fact, I can do one better and say that the average increase every 2016 blocks since last March is... wait for it... 23.73%. That's pretty massive when you think about it, and it's the reason why difficulty has gone from 6,695,826 on March 24, 2014 to a staggering 5,006,860,589 today. Put another way, the difficulty -- and thus the returns for mining -- have changed by a factor of nearly 750. And what's worse: there's no sign of slowing down just yet.
So let's take a closer look at the AntMiner S1. At a price of $600 (around 1 BTC), assuming you have spare power supplies and everything else you need, we can get a pretty good idea of your profit estimates using any number of online calculators. Personally, I think the calculator over at BitcoinWisdom is one of the best, and it's what I used. Since I now have my AntMiner S1 ASICs up and running, I know power, performance, etc. With the current difficulty and running at 400GH (overclocked) with a power draw of 850W, my two AntMiners are looking at the following scenarios:
1) 15% difficulty increase every 2016 blocks = 233 days before the power costs outweigh the income. I can make around $454 in that time off my ~$1200 investment. This is basically the "best case" scenario.
2) 20% difficulty increase every 2016 blocks = 177 days before it's no longer worth mining. I'll only earn about $70 off my investment.
3) 23% difficulty increase every 2016 blocks = 163 days before I should stop mining; I'll lose $82 based on current prices.
Now, obviously the price of BTC is the big wild card. If we see $1000+ again, and I think we will some time in the next 9 months, I easily earn back far more than the initial investment. If we take a nose dive on the other hand and don't recover, I stand to lose even more of my investment. So it's a risk, but a calculated one. And in another 10 days or so when the difficulty jumps up 20%, things start looking even worse. At $600 for an S1, you'd stand to lose $70 in the "reasonable" 20% increase scenario -- a swing of $140 in just 10 days (and the reason ASIC prices are tumbling).
If you're thinking, "Okay, but the AntMiner is a 55nm ASIC -- what you need to look at is a good 28nm ASIC," well, you're only partially correct. If you took a chance and pre-ordered a Terraminer IV a while back, you're rolling in the BTC right now. If you order one right now from the June batch however, let's be optimistic and say you get it in 60 days (before the end of May). With difficulty jumps of 20%, you'd end up losing half your investment! Even smaller 15% increases would still result in a loss of over $1000. That's a pretty sobering thought -- one of the fastest, most efficient BTC ASICs right now is looking like a terrible risk for future buyers; either price needs to come down or difficulty needs to stabilize. BTC prices basically need to double for you just to break even, and the rate of difficulty increases will likely slow down before then, but be careful.
What about the scrypt ASICs? Well, Alpha Technologies is now promising 90MH instead of 25MH, which is pretty great to hear. Depending on when the hardware arrives and the difficulty at that time, however, it's not looking so hot. Let's say it ships in just 60 days (which is very aggressive). At a moderate 5% increase in difficulty every LTC cycle that would mean mining LTC would never recover the initial investment cost. Even if we assume you can beat LTC returns by 50%, you'd still only make about $1850 on the $10,000 investment. I suspect those who pre-ordered the first batch will do pretty well, but the future (most likely) second and third batch orders are far more suspect.
The big problem with ASICs of course is that once it becomes unprofitable to mine with them, they're essentially useless. With a PC, you can at least use it to run Windows (or Linux or whatever if that's your thing), play games, do real work, etc. You might not need dozens of GPUs, but you can at least recover some of the initial investment. Perhaps you'll find some people willing to buy your outdated BTC ASICs as well, but I'd expect very low prices at best.
In short, ASICs are mostly going to make a lot of money for the people selling the ASICs, not for those buying the ASICs. It's the Gold Rush all over again, where the real winners are the people supplying the miners. It will certainly be interesting to see where pricing and difficulty stabilize over the coming months, but don't be surprised if a lot of the Scrypt ASICs turn out to be losing propositions. Unless of course we see a repeat of last November where prices shot up 20X on Litecoin in only a week or so, which is what we're all probably hoping to see. :-)
There's more available in the newsletter, as usual. Just let me know you'd like to start your subscription with the 3/26 email and I'll make sure you get it!
Lately, like since about March of 2013, Bitcoin has been pretty consistent about increasing in difficulty by 20% or so every 12 days. In fact, I can do one better and say that the average increase every 2016 blocks since last March is... wait for it... 23.73%. That's pretty massive when you think about it, and it's the reason why difficulty has gone from 6,695,826 on March 24, 2014 to a staggering 5,006,860,589 today. Put another way, the difficulty -- and thus the returns for mining -- have changed by a factor of nearly 750. And what's worse: there's no sign of slowing down just yet.
So let's take a closer look at the AntMiner S1. At a price of $600 (around 1 BTC), assuming you have spare power supplies and everything else you need, we can get a pretty good idea of your profit estimates using any number of online calculators. Personally, I think the calculator over at BitcoinWisdom is one of the best, and it's what I used. Since I now have my AntMiner S1 ASICs up and running, I know power, performance, etc. With the current difficulty and running at 400GH (overclocked) with a power draw of 850W, my two AntMiners are looking at the following scenarios:
1) 15% difficulty increase every 2016 blocks = 233 days before the power costs outweigh the income. I can make around $454 in that time off my ~$1200 investment. This is basically the "best case" scenario.
2) 20% difficulty increase every 2016 blocks = 177 days before it's no longer worth mining. I'll only earn about $70 off my investment.
3) 23% difficulty increase every 2016 blocks = 163 days before I should stop mining; I'll lose $82 based on current prices.
Now, obviously the price of BTC is the big wild card. If we see $1000+ again, and I think we will some time in the next 9 months, I easily earn back far more than the initial investment. If we take a nose dive on the other hand and don't recover, I stand to lose even more of my investment. So it's a risk, but a calculated one. And in another 10 days or so when the difficulty jumps up 20%, things start looking even worse. At $600 for an S1, you'd stand to lose $70 in the "reasonable" 20% increase scenario -- a swing of $140 in just 10 days (and the reason ASIC prices are tumbling).
If you're thinking, "Okay, but the AntMiner is a 55nm ASIC -- what you need to look at is a good 28nm ASIC," well, you're only partially correct. If you took a chance and pre-ordered a Terraminer IV a while back, you're rolling in the BTC right now. If you order one right now from the June batch however, let's be optimistic and say you get it in 60 days (before the end of May). With difficulty jumps of 20%, you'd end up losing half your investment! Even smaller 15% increases would still result in a loss of over $1000. That's a pretty sobering thought -- one of the fastest, most efficient BTC ASICs right now is looking like a terrible risk for future buyers; either price needs to come down or difficulty needs to stabilize. BTC prices basically need to double for you just to break even, and the rate of difficulty increases will likely slow down before then, but be careful.
What about the scrypt ASICs? Well, Alpha Technologies is now promising 90MH instead of 25MH, which is pretty great to hear. Depending on when the hardware arrives and the difficulty at that time, however, it's not looking so hot. Let's say it ships in just 60 days (which is very aggressive). At a moderate 5% increase in difficulty every LTC cycle that would mean mining LTC would never recover the initial investment cost. Even if we assume you can beat LTC returns by 50%, you'd still only make about $1850 on the $10,000 investment. I suspect those who pre-ordered the first batch will do pretty well, but the future (most likely) second and third batch orders are far more suspect.
The big problem with ASICs of course is that once it becomes unprofitable to mine with them, they're essentially useless. With a PC, you can at least use it to run Windows (or Linux or whatever if that's your thing), play games, do real work, etc. You might not need dozens of GPUs, but you can at least recover some of the initial investment. Perhaps you'll find some people willing to buy your outdated BTC ASICs as well, but I'd expect very low prices at best.
In short, ASICs are mostly going to make a lot of money for the people selling the ASICs, not for those buying the ASICs. It's the Gold Rush all over again, where the real winners are the people supplying the miners. It will certainly be interesting to see where pricing and difficulty stabilize over the coming months, but don't be surprised if a lot of the Scrypt ASICs turn out to be losing propositions. Unless of course we see a repeat of last November where prices shot up 20X on Litecoin in only a week or so, which is what we're all probably hoping to see. :-)
There's more available in the newsletter, as usual. Just let me know you'd like to start your subscription with the 3/26 email and I'll make sure you get it!
Monday, February 17, 2014
Everything You Wanted to Know about Scrypt-Jane
I've talked a bit about a few scrypt-jane based coins previously -- specifically I've mentioned Microcoin, but there are several others. I've also talked about the alternative Proof of Work (PoW) algorithm used in Vertcoin, "Scrypt Adaptive N-Factor". Put simply, I like the VTC algorithm a lot more, but I've never really discussed why. So, this is as good a time as any to broach that subject.
Fundamentally, the difference between scrypt-jane and VTC's Adaptive-N-Factor PoW algorithms is pretty simple. VTC basically went with hand-picked dates for when to move on to various higher N-Factors, while most coins using scrypt-jane have a formula that decides when it's time to move up the difficulty ladder. In fact, VTC actually adjusted it's rollout schedule in a hard-fork of the blockchain after the first couple of weeks, at the same time they introduced KGW.
But I'm getting ahead of myself. First, I suppose I ought to quickly cover what N-Factor is used for. N-Factor represents the amount of data that a thread works on, with the N in N-Factor being the power of two (minus 1) that's used. Standard scrypt uses and N-Factor of 9 (I think? Correct me if I'm wrong and I'll fix the table!). Here's the quick list of RAM requirements (poached from the VTC announcement thread):
As you can imagine, running the scrypt algorithm with N-Factor of 20 would require a huge chunk of RAM even on a CPU with eight threads -- 1GB just for the basic memory footprint. On a GPU like the R9 290X that has 2816 shader cores and 4GB RAM, any N-Factor above 13 is going to present some real problems. Now, let's get back to VTC's Adaptive-N vs. scrypt-jane.
With Vertcoin, the rollout of the above N-Factors has been set such that we start at N-Factor 11, we'll move to N=12 February 25, 2016; N=13 comes in September 30, 2017, and so on. The reasoning is that right now, scrypt ASICs are just starting to show up, and they're all built for N=10; to make a new ASIC for N=11 will require a solid 6-12 months at least -- assuming you can find a company that thinks it's even worth doing, considering N=12 will supplant N=11 -- and it would require a lot of RAM. And in the meantime, those with GPUs can still do a decent job of mining.
Truth be told, scrypt-jane doesn't actually define any schedule -- it's just a flexible implementation of scrypt that can be tweaked as desired. It supports several mixing and hashing functions, with scrypt being used with a varying N-Factor. In general, scrypt-jane implementations have set a minimum N-Factor of 4 and a maximum N-Factor of 30. That's fine, but the problem is how coins are scaling the N-Factor. Here's what happens with YACoin, YBCoin, Ultracoin, and Microcoin to name several that I've checked:
Personally... I think that's a stupid set of N-Factor progressions. There, I said it: the standard scrypt-jane implementation has non-sensible spacing between some of the N-Factors. Take the first 48.5 days when we're below N-Factor 10 as a prime example; what purpose does it serve to use such low N-Factors? Well, early on the GPU mining speed in scrypt-jane will be much higher compared to CPU mining, whereas once you hit N-Factors of 9 and above it starts to slow down. At that point, we're still only looking at 15-50 days between some pretty severe adjustments in hash rates from 10-13, which just creates a bit of chaos. Then round about N-Factor 14, we reach the point where CPUs become roughly as fast as GPUs, give or take -- we've actually got a real example of this, as YACoin is already at N-Factor 14 -- and then we start to slow down on the N-Factor changes.
So here's the question: is a coin that's predominantly limited to CPU mining a good thing? While I'm happy to mine such coins when it makes sense from a profitability standpoint, I generally assume that any good coin that sticks around long enough will end up with a GPU miner port, unless it's simply impractical to make one. But if the algorithm is simply not portable to GPUs for whatever reason, I don't inherently think that it's a bad thing. My problem with scrypt-jane is that it sort of goes the opposite route: it starts out by opening the floodgates for GPUs, but then after six months or so (194 days), we reach N-Factors where GPU mining becomes quite slow. That will result in most if not all GPUs leaving to go to "greener pastures", which is sort of the opposite of what you want to happen.
The typical progression is usually the opposite. We start with a CPU-only coin (BTC started this way, and so did LTC, QRK, and now DRK). After the coin/algorithm gains some momentum, smart people figure out a way to use GPUs to speed up the work. More time passes and if the coin(s) using the PoW algorithm remains viable, maybe people even try to make an FPGA or ASIC for the core algorithms. If you want to stop this sort of progression, well, honestly you can't truly stop it -- all you can do is make it more difficult. Remember that scrypt was originally created to be a CPU-only PoW, but that failed. Quark and X11 have now been ported to GPUs with varying degrees of success. Considering GPUs are becoming more like CPUs, at some point in the future it's not a stretch to assume that if something can't be mined (effectively) with a GPU, it probably can't be mined with a CPU either.
Wrapping up, I wanted to quickly look at the most common scrypt-jane coins and check on hash rates profitability -- for CPUs as well as GPUs. This is obviously just a snapshot in time, but going with the four coins mentioned earlier (which are similar in most respects in terms of PoW implementation, though the block reward schedules vary), here's what we have (as best as I can tell -- again, correct me if I'm wrong as it's a bit tricky to find the current N-Factor for most of these coins):
So it's worth pointing out that the start times for the various coins determine when the N-Factor changes; Microcoin has a start time of 1389028879 (06 Jan 2014 17:21:19 GMT) while Ultracoin has a start time of 1388361600 (30 Dec 2013 00:00:00 GMT), so UTC is currently one N-Factor ahead of MRC. As for YAC and YBC, other than their reward structures they're both close enough in start times that they're on N-Factor 14. Also, I couldn't find a CPU miner that didn't hard-code the start time so I couldn't test CPU rates on MRC and YAC (yet -- if you have a binary for Windows, let me know).
The short summary: YAC and YBC are mostly not worth your CPU/GPU time, while for the time being MRC and UTC are doing okay. MRC will have a lot of coins, and the current exchange rate fluctuates around 2-4 satoshis, so you can see pretty large swings in value over the course of a single day. If you want to dump a bunch of MRC, you'll probably get 2 satoshi whereas being patient can get you 3 or 4 satoshi.
The big problem with mining any of these is that the scaling N-Factor happens so early that if you're not in before N-Factor 12 or so, you've missed the boat for GPUs. Which means if you are in early enough, holding the coins for the first 100-150 days or so (until we reach N-Factors of 12) isn't a bad idea. Check back in a couple months and I'll let you know how that strategy worked out for me!
Wrapping this up, sorry if I'm pissing any anybody's favorite pool, but I call it as I see it. There have been plenty of questionable coins released in the past year, and while early adopters have often made out with big winnings, johnny-come-lately is often left wasting their time and energy on a dead-end coin. Plus, I had some people ask about Ultracoin in particular (since it's relatively new), and this post is a result of my looking into that topic. What's really sad is the state of many of the coin releases, with poorly documented code that was clearly just cloned from another coin and tweaked as little as possible. Anyway, we'll see which coins are still around in another year and being actively mined; until then, happy (scrypt-jane?) mining!
Donations welcome
MRC: 1Ctnz6cHcMYiF9fz2pyd6orFuo1mDhKdWj
BTC: 153qS9Ze32hnV3fwirZLWNka4wBAowc21E
LTC: LfCLyykrNFftzpdWejR73hf478ZtBzQ9jE
VTC: VaYNYUUi3amUTKQAQSs9EM4xJyNRyqnoUG
UTC: Uj1rnV4fZBPAngTj7xcYHrRcxKkadRiqGo
YAC: Y1xTeeJFnwawaCPVHcvhH23w5oDGy1VRgC
YBC: Yg6wWEd2fcMyMcxbQ3eGg3dXo5aYs878pt
Fundamentally, the difference between scrypt-jane and VTC's Adaptive-N-Factor PoW algorithms is pretty simple. VTC basically went with hand-picked dates for when to move on to various higher N-Factors, while most coins using scrypt-jane have a formula that decides when it's time to move up the difficulty ladder. In fact, VTC actually adjusted it's rollout schedule in a hard-fork of the blockchain after the first couple of weeks, at the same time they introduced KGW.
But I'm getting ahead of myself. First, I suppose I ought to quickly cover what N-Factor is used for. N-Factor represents the amount of data that a thread works on, with the N in N-Factor being the power of two (minus 1) that's used. Standard scrypt uses and N-Factor of 9 (I think? Correct me if I'm wrong and I'll fix the table!). Here's the quick list of RAM requirements (poached from the VTC announcement thread):
| N-Factor | N (2N+1) | Memory |
|---|---|---|
| 9 | 1024 | 128KB |
| 10 | 2048 | 256KB |
| 11 | 4096 | 512KB |
| 12 | 8192 | 1MB |
| 13 | 16384 | 2MB |
| 14 | 32768 | 4MB |
| 15 | 65536 | 8MB |
| 16 | 131072 | 16MB |
| 17 | 262144 | 32MB |
| 18 | 524288 | 64MB |
| 19 | 1048576 | 128MB |
| 20 | 2097152 | 256MB |
| 21 | 4194304 | 512MB |
| 22 | 8388608 | 1GB |
| 23 | 16777216 | 2GB |
| 24 | 33554432 | 4GB |
With Vertcoin, the rollout of the above N-Factors has been set such that we start at N-Factor 11, we'll move to N=12 February 25, 2016; N=13 comes in September 30, 2017, and so on. The reasoning is that right now, scrypt ASICs are just starting to show up, and they're all built for N=10; to make a new ASIC for N=11 will require a solid 6-12 months at least -- assuming you can find a company that thinks it's even worth doing, considering N=12 will supplant N=11 -- and it would require a lot of RAM. And in the meantime, those with GPUs can still do a decent job of mining.
Truth be told, scrypt-jane doesn't actually define any schedule -- it's just a flexible implementation of scrypt that can be tweaked as desired. It supports several mixing and hashing functions, with scrypt being used with a varying N-Factor. In general, scrypt-jane implementations have set a minimum N-Factor of 4 and a maximum N-Factor of 30. That's fine, but the problem is how coins are scaling the N-Factor. Here's what happens with YACoin, YBCoin, Ultracoin, and Microcoin to name several that I've checked:
- Calculate the number of seconds since the launch of the coin.
- Look at that number in binary, and basically find how many significant binary digits are used, but don't count the three most significant digits.
- With those three most significant binary digits, do a logical AND operation with 0b11 (or in other words, look at the two least significant bits).
- Using the numbers from steps two and three: NFactor = ([BinSigDigits - 3] * 170 + [{ThreeMostSigBinDigits & 0b11} * 25] - 2320) / 100
- The result is converted to an integer and limited to values between 4 and 30, inclusive.
That's one of those formulas that just doesn't seem too sensible to me, and the code unfortunately doesn't shed any light on why these numbers were selected. Why 170, 25, 2320, and 100? As my computer science instructor used to call such numbers: GOK (God Only Knows). This is why we have constants defined in code, so that you can give a short comment on what the number is used for. Bad coding practices unfortunately are par for the course in the cryptocurrency world. So what does this formula actually mean? Well, it means the N-Factors will be changed on the following time schedule:
| N-Factor | Seconds Since Launch | Days at N-Factor |
|---|---|---|
| 4 | 0-524287 | 6.07 |
| 5 | 524288-786431 | 3.04 |
| 6 | 786432-1048575 | 3.0 |
| 7 | 1048576-1835007 | 9.1 |
| 8 | 1835008-2097151 | 3.1 |
| 9 | 2097152-4194303 | 24.2 |
| 10 | 4194304-5242879 | 12.2 |
| 11 | 5242880-8388607 | 36.4 |
| 12 | 8388608-12582911 | 49 |
| 13 | 12582912-16777215 | 48 |
| 14 | 16777216-33554431 | 194 |
| 15 | 33554432-41943039 | 97 |
| 16 | 41943040-67108863 | 292 |
| 17 | 67108864-100663295 | 388 |
| 18 | 100663296-134217727 | 388 |
| 19 | 134217728-234881023 | 1166 |
| 20 | 234881024-268435455 | 388 |
| 21 | 268435456-536870911 | 3107 |
| 22 | 536870912-805306367 | 3107 |
| 23 | 805306368-1073741823 | 3107 |
| 24 | 1073741824-1879048191 | 9320 |
| 25 | 1879048192-2147483647 | 3107 |
| 26 | 2147483648-4294967295 | 24855 |
| 27 | 4294967296-5368709119 | 12428 |
| 28 | 5368709120-8589934591 | 37283 |
| 29 | 8589934592-12884901887 | 49710 |
| 30 | 12884901888+ | (Indefinitely) |
The typical progression is usually the opposite. We start with a CPU-only coin (BTC started this way, and so did LTC, QRK, and now DRK). After the coin/algorithm gains some momentum, smart people figure out a way to use GPUs to speed up the work. More time passes and if the coin(s) using the PoW algorithm remains viable, maybe people even try to make an FPGA or ASIC for the core algorithms. If you want to stop this sort of progression, well, honestly you can't truly stop it -- all you can do is make it more difficult. Remember that scrypt was originally created to be a CPU-only PoW, but that failed. Quark and X11 have now been ported to GPUs with varying degrees of success. Considering GPUs are becoming more like CPUs, at some point in the future it's not a stretch to assume that if something can't be mined (effectively) with a GPU, it probably can't be mined with a CPU either.
Wrapping up, I wanted to quickly look at the most common scrypt-jane coins and check on hash rates profitability -- for CPUs as well as GPUs. This is obviously just a snapshot in time, but going with the four coins mentioned earlier (which are similar in most respects in terms of PoW implementation, though the block reward schedules vary), here's what we have (as best as I can tell -- again, correct me if I'm wrong as it's a bit tricky to find the current N-Factor for most of these coins):
| Coin | N-Factor | CPU Perf. (i7-4770K) |
GPU Perf. (HD 7970) |
Difficulty | BTC Rate | BTC/Day (CPU / GPU) |
|---|---|---|---|---|---|---|
| Microcoin | 10 | ? | 450 | 2.319 | 0.00000003 | ? / 0.0134 |
| Ultracoin | 11 | ? | 235 | 6.828 | 0.00034 | ? / 0.0118 |
| YACoin | 14 | 0.97K | 1.4K | 0.0167 | 0.000031 | 0.00184 / 0.00258 |
| YBCoin | 14 | 0.97K | 1.4K | 0.119 | 0.0037 | 0.00191 / 0.002^8 |
The short summary: YAC and YBC are mostly not worth your CPU/GPU time, while for the time being MRC and UTC are doing okay. MRC will have a lot of coins, and the current exchange rate fluctuates around 2-4 satoshis, so you can see pretty large swings in value over the course of a single day. If you want to dump a bunch of MRC, you'll probably get 2 satoshi whereas being patient can get you 3 or 4 satoshi.
The big problem with mining any of these is that the scaling N-Factor happens so early that if you're not in before N-Factor 12 or so, you've missed the boat for GPUs. Which means if you are in early enough, holding the coins for the first 100-150 days or so (until we reach N-Factors of 12) isn't a bad idea. Check back in a couple months and I'll let you know how that strategy worked out for me!
Wrapping this up, sorry if I'm pissing any anybody's favorite pool, but I call it as I see it. There have been plenty of questionable coins released in the past year, and while early adopters have often made out with big winnings, johnny-come-lately is often left wasting their time and energy on a dead-end coin. Plus, I had some people ask about Ultracoin in particular (since it's relatively new), and this post is a result of my looking into that topic. What's really sad is the state of many of the coin releases, with poorly documented code that was clearly just cloned from another coin and tweaked as little as possible. Anyway, we'll see which coins are still around in another year and being actively mined; until then, happy (scrypt-jane?) mining!
Donations welcome
MRC: 1Ctnz6cHcMYiF9fz2pyd6orFuo1mDhKdWj
BTC: 153qS9Ze32hnV3fwirZLWNka4wBAowc21E
LTC: LfCLyykrNFftzpdWejR73hf478ZtBzQ9jE
VTC: VaYNYUUi3amUTKQAQSs9EM4xJyNRyqnoUG
UTC: Uj1rnV4fZBPAngTj7xcYHrRcxKkadRiqGo
YAC: Y1xTeeJFnwawaCPVHcvhH23w5oDGy1VRgC
YBC: Yg6wWEd2fcMyMcxbQ3eGg3dXo5aYs878pt
Thursday, February 6, 2014
What Makes a Good Cryptocurrency, Part 1: Slow and Steady
I’ve discussed some of these thoughts before, but I wanted to get into this a bit more. Vertcoin is a great example of how to make a useful new cryptocurrency, and the reasons for its current success are due in a large part to the design. Fundamentally, I think any good cryptocurrency needs to have the following:
Of course, "short" is all relative, but to me a coin should be designed such that it will still have a reason for mining (i.e. securing the network) in five, ten, twenty, etc. years. If as an example you have a new currency with one million total coins and they'll all be mined in six months, what will keep miners going with securing the network past that point? If transaction fees of 0.1 coins per transaction were mandatory, and if there are on average 10 transactions every block, that would mean even if you're doing a block every 30 seconds, you're still only giving out 2880 coins per day. So the people that mined the initial 1 million coins of this hypothetical currency did so at let's just say a steady rate of 5555 coins per day, and if you had a minimum guaranteed transaction fee of one coin, it perhaps wouldn't be so bad...but that's not really what we have on most coins.
The reality is that transaction fees are far, far lower than 1 coin on most of the major cryptocurrencies. Take Bitcoin as an example -- it's one of the most heavily used coins, and yet looking at the past 20 or so blocks, the biggest block I could find was this one. That has 826 transactions and only 0.21444776 BTC in total fees. If we were depending wholly on transaction fees, all of the power going into the Bitcoin network would only amount to on average something like 0.05 BTC every ten minutes, paid for by those conducting transactions.
Right now, the 25 BTC block reward means there's a bounty of around $20,000 that will go to some lucky miner (or pool) on average every ten minutes. The total network hash rate of Bitcoin has now reached a pretty staggering 19,720,113 GHash/sec. Let's assume for a second that every system participating in Bitcoin hashing is as efficient as the latest and greatest 28nm ASICs. That would mean world-wide, Bitcoin is sucking down around 11,503,400 Watts of power. At a relatively inexpensive $0.10 per kWh, that means in a day Bitcoin consumes $27608.16 worth of power -- not too bad, as the current block reward will pay that in just over 10 minutes. (Realistically, most ASICs are far less efficient so the power cost is probably twice that -- so 30 minutes to pay for all the power use of BTC.)
But what happens in the future, like say in 2030 when the block reward of Bitcoin will probably be at the 0.78125 BTC mark? Most likely we'll be seeing a lot more transactions on the Bitcoin network, so instead of 0.05 in average fees per block, maybe we get to the point where the average transaction fees per block amount to 0.5 BTC (which is probably a bit of a stretch). At that point, we're looking at perhaps 1.25 BTC every ten minutes, and the power use of the BTC network may not actually drop much (and more likely it will increase). What happens then?
1.25 BTC per block right now is still more than enough to cover the cost of power -- in fact, 11.5 MW of power costs something like $200 per block, so at current prices we would only need 0.25 BTC per block for those securing the network to break even. If BTC is worth ten times as much in twenty years (which is either optimistic or horribly pessimistic), an average block reward of 1 BTC with transaction fees will be enough to power a while lot of hashing, so the network stays secure and BTC can continue to succeed. It was designed with this sort of scenario in mind, which is why things should continue to function well. But that's for Bitcoin; what about other cryptocurrencies? Time to pick on DOGE for a minute.
The total number of blocks before the block reward drops to 10K + transaction fees is around 756,250 blocks -- or in just 525 days from the time DOGE first started. Looking at the past day of blocks, here's one of the largest; with a total of 617 transactions, there were just over 575 DOGE paid in transaction fees. Right now the total network hash rate of DOGE is around 86 GHash, but it's happening almost entirely with GPUs. Assuming everyone is using the most efficient GPU possible, so an R9 290X hashing at 900KHash and drawing 350W, that means the DOGE network is drawing about 34,000,000W (and in reality it might be 50-100% more than that due to less efficient GPUs). With an average of 500,000 DOGE produced every minute, that's 720 million DOGE per day, with a value of roughly $1,000,000. Meanwhile, the power cost for the DOGE network is around $81,600 per day, so clearly DOGE is more than paying for the power use. But what happens when the block reward drops to 10K + transaction fees?
With the largest block of the past few hours generating 575 DOGE, it's probably a safe bet that best-case we're looking at 1000 DOGE or less per block in transaction fees. That means 15,840,000 DOGE per day, so to break even on power costs of $81,600 per day DOGE will need to be worth at least $0.0052 per DOGE, or in BTC terms it would need to trade at around 0.0000064 BTC per DOGE. That's only about four times as much as the current value of DOGE, so we can certainly hit that level, but again that's just to break even. If other coins are generating a substantial profit, why would people stick with DOGE just to break even on their power costs? I'd say bare minimum it would need to consistently generate twice as much revenue for those mining (securing the network) as it costs in power, and perhaps 2-3 times the return would be better. Will we see DOGE trading at 0.0000192 BTC/DOGE? Possibly, but more likely a new meme will supplant DOGE before then.
Put another way: if you believe DOGE will manage to maintain current hash rates for the next two years, you'd be a fool to sell any of your DOGE at the current prices. All the "DOGE millionaires" (currently around $1300 worth of DOGE) would be looking at the equivalent of $10,000 or more if that happens. A nearly 10-fold return on your investment in under two years is "pie in the sky" sort of thinking in terms of investments, but yet cryptocurrencies are all beating that mark -- often by a large margin.
As usual, this is a bit long, but when you start thinking in terms like this it should help you to start seeing why coins that pay out most/all of their block rewards in a short amount of time are a bad idea. They start out looking pretty interesting and might garner some headlines and make waves, but a couple years from now I expect Litecoin will still be chugging along -- the little engine that could -- while most/all of the meme coins are going to end up fading away. And really, it's better that way in my book, as if I'm talking to friends or investors and trying to get them to understand that cryptocurrencies can succeed, the "success" of a joke coin like DOGE doesn't help at all.
Now if you'll pardon me, I'm going to go create the All Your Base Are Belong To Us (AYBABTU) coin. Does that sound old and stupid to you? Well, that's what today's memes will be in another decade. All memes die, and the meme currencies will die with them.
Getting back to the main topic, what I'm saying is that you need to build a cryptocurrency that will pay out block rewards long enough to reach the point where the transaction fees can actually sustain the network. Or you can be like DOGE and go with a deflationary approach and always have 10K DOGE per block minimums, forever. But that's what got us into the mess we're in with fiat right now, isn't it? As far as a long-term payout, there are plenty of ways to do that -- Bitcoin, Litecoin, and Vertcoin cut the block reward in half every 4 years or so while other coins might drop linearly over time. Coins that pay out too quickly on the other hand (DOGE, QRK, FZ, etc.) are very likely to reach the point where there's no profit in mining/securing the network. If that happens, the coin(s) will die. You've been warned -- don't get caught holding the bag for a poorly designed cryptocurrency.
EDIT: Note that I missed the fact that DOGE has a 10K minimum reward, apparently forever. I don't really like that as a solution either, if you can't tell. I've updated the text to reflect this with new calculations. Thanks to several readers for pointing out my errors!
- It needs to do something new relative to what is already out there.
- It needs to launch in a “fair” manner.
- Difficulty adjustments should happen sooner rather than later.
- It needs to be designed with the future in mind.
Of course, "short" is all relative, but to me a coin should be designed such that it will still have a reason for mining (i.e. securing the network) in five, ten, twenty, etc. years. If as an example you have a new currency with one million total coins and they'll all be mined in six months, what will keep miners going with securing the network past that point? If transaction fees of 0.1 coins per transaction were mandatory, and if there are on average 10 transactions every block, that would mean even if you're doing a block every 30 seconds, you're still only giving out 2880 coins per day. So the people that mined the initial 1 million coins of this hypothetical currency did so at let's just say a steady rate of 5555 coins per day, and if you had a minimum guaranteed transaction fee of one coin, it perhaps wouldn't be so bad...but that's not really what we have on most coins.
The reality is that transaction fees are far, far lower than 1 coin on most of the major cryptocurrencies. Take Bitcoin as an example -- it's one of the most heavily used coins, and yet looking at the past 20 or so blocks, the biggest block I could find was this one. That has 826 transactions and only 0.21444776 BTC in total fees. If we were depending wholly on transaction fees, all of the power going into the Bitcoin network would only amount to on average something like 0.05 BTC every ten minutes, paid for by those conducting transactions.
Right now, the 25 BTC block reward means there's a bounty of around $20,000 that will go to some lucky miner (or pool) on average every ten minutes. The total network hash rate of Bitcoin has now reached a pretty staggering 19,720,113 GHash/sec. Let's assume for a second that every system participating in Bitcoin hashing is as efficient as the latest and greatest 28nm ASICs. That would mean world-wide, Bitcoin is sucking down around 11,503,400 Watts of power. At a relatively inexpensive $0.10 per kWh, that means in a day Bitcoin consumes $27608.16 worth of power -- not too bad, as the current block reward will pay that in just over 10 minutes. (Realistically, most ASICs are far less efficient so the power cost is probably twice that -- so 30 minutes to pay for all the power use of BTC.)
But what happens in the future, like say in 2030 when the block reward of Bitcoin will probably be at the 0.78125 BTC mark? Most likely we'll be seeing a lot more transactions on the Bitcoin network, so instead of 0.05 in average fees per block, maybe we get to the point where the average transaction fees per block amount to 0.5 BTC (which is probably a bit of a stretch). At that point, we're looking at perhaps 1.25 BTC every ten minutes, and the power use of the BTC network may not actually drop much (and more likely it will increase). What happens then?
1.25 BTC per block right now is still more than enough to cover the cost of power -- in fact, 11.5 MW of power costs something like $200 per block, so at current prices we would only need 0.25 BTC per block for those securing the network to break even. If BTC is worth ten times as much in twenty years (which is either optimistic or horribly pessimistic), an average block reward of 1 BTC with transaction fees will be enough to power a while lot of hashing, so the network stays secure and BTC can continue to succeed. It was designed with this sort of scenario in mind, which is why things should continue to function well. But that's for Bitcoin; what about other cryptocurrencies? Time to pick on DOGE for a minute.
The total number of blocks before the block reward drops to 10K + transaction fees is around 756,250 blocks -- or in just 525 days from the time DOGE first started. Looking at the past day of blocks, here's one of the largest; with a total of 617 transactions, there were just over 575 DOGE paid in transaction fees. Right now the total network hash rate of DOGE is around 86 GHash, but it's happening almost entirely with GPUs. Assuming everyone is using the most efficient GPU possible, so an R9 290X hashing at 900KHash and drawing 350W, that means the DOGE network is drawing about 34,000,000W (and in reality it might be 50-100% more than that due to less efficient GPUs). With an average of 500,000 DOGE produced every minute, that's 720 million DOGE per day, with a value of roughly $1,000,000. Meanwhile, the power cost for the DOGE network is around $81,600 per day, so clearly DOGE is more than paying for the power use. But what happens when the block reward drops to 10K + transaction fees?
With the largest block of the past few hours generating 575 DOGE, it's probably a safe bet that best-case we're looking at 1000 DOGE or less per block in transaction fees. That means 15,840,000 DOGE per day, so to break even on power costs of $81,600 per day DOGE will need to be worth at least $0.0052 per DOGE, or in BTC terms it would need to trade at around 0.0000064 BTC per DOGE. That's only about four times as much as the current value of DOGE, so we can certainly hit that level, but again that's just to break even. If other coins are generating a substantial profit, why would people stick with DOGE just to break even on their power costs? I'd say bare minimum it would need to consistently generate twice as much revenue for those mining (securing the network) as it costs in power, and perhaps 2-3 times the return would be better. Will we see DOGE trading at 0.0000192 BTC/DOGE? Possibly, but more likely a new meme will supplant DOGE before then.
Put another way: if you believe DOGE will manage to maintain current hash rates for the next two years, you'd be a fool to sell any of your DOGE at the current prices. All the "DOGE millionaires" (currently around $1300 worth of DOGE) would be looking at the equivalent of $10,000 or more if that happens. A nearly 10-fold return on your investment in under two years is "pie in the sky" sort of thinking in terms of investments, but yet cryptocurrencies are all beating that mark -- often by a large margin.
As usual, this is a bit long, but when you start thinking in terms like this it should help you to start seeing why coins that pay out most/all of their block rewards in a short amount of time are a bad idea. They start out looking pretty interesting and might garner some headlines and make waves, but a couple years from now I expect Litecoin will still be chugging along -- the little engine that could -- while most/all of the meme coins are going to end up fading away. And really, it's better that way in my book, as if I'm talking to friends or investors and trying to get them to understand that cryptocurrencies can succeed, the "success" of a joke coin like DOGE doesn't help at all.
Now if you'll pardon me, I'm going to go create the All Your Base Are Belong To Us (AYBABTU) coin. Does that sound old and stupid to you? Well, that's what today's memes will be in another decade. All memes die, and the meme currencies will die with them.
Getting back to the main topic, what I'm saying is that you need to build a cryptocurrency that will pay out block rewards long enough to reach the point where the transaction fees can actually sustain the network. Or you can be like DOGE and go with a deflationary approach and always have 10K DOGE per block minimums, forever. But that's what got us into the mess we're in with fiat right now, isn't it? As far as a long-term payout, there are plenty of ways to do that -- Bitcoin, Litecoin, and Vertcoin cut the block reward in half every 4 years or so while other coins might drop linearly over time. Coins that pay out too quickly on the other hand (DOGE, QRK, FZ, etc.) are very likely to reach the point where there's no profit in mining/securing the network. If that happens, the coin(s) will die. You've been warned -- don't get caught holding the bag for a poorly designed cryptocurrency.
EDIT: Note that I missed the fact that DOGE has a 10K minimum reward, apparently forever. I don't really like that as a solution either, if you can't tell. I've updated the text to reflect this with new calculations. Thanks to several readers for pointing out my errors!
Tuesday, February 4, 2014
Vertcoin: Potentially More Valuable than BTC or LTC?
It seems every new cryptocurrency that someone creates these days ends up with people taking sides. It's either a "scam coin / pump and dump" or it's the greatest thing since sliced bread. Now, there are a few ways to make a coin very undesirable -- premining a large chunk of coins before releasing a cryptocurrency to the mining community would be one, and I'd also steer clear (long-term at least) of any coin that distributes a large percentage of the total coins in a short amount of time. Looking at Vertcoin, this is what makes it worth potentially more than even Litecoin -- and long-term it could even surpass Bitcoin (assuming it remains ASIC-proof).
1) It's more resistant to ASICs
2) It has KGW so it's resistant to pools and/or large fluctuations in the number of miners
3) There was no premine or other silliness on the launch
4) It pays out slow and steady over a very long period of time.
Why shouldn't Vertcoin succeed where so many others have failed (other than the name and logo)? At present we are not even at block 30K, which means there are fewer than 1,500,000 VTC in existence. Sure, the first week or two things went a bit too fast, but now we've leveled off and for the foreseeable future we'll generate blocks every 2.5 minutes. We are 810,000 blocks away from the reward halving, and KGW means we really won't hit the halving much earlier than expected. That means 33,750 hours -- or 1406.25 days, or 3.85 years -- from now, we will have mined half of all VTC. By mining slow and steady (as opposed to, say, DOGE, which will be mined out in about 525 days since launch), we avoid the potential for a massive pump and dump.
As to the lack of a premine, even BTC had one -- Satoshi mined it with a small group of friends for about a year before it really hit the public. Wouldn't it have been nice to be one of select few (some say around 20) people mining BTC that first year? 2.6 million BTC went out to a choice few; so much for the "currency of the people" -- and no significant giveaways ever happened, at least not to a point where anywhere near 2 million BTC was distributed among the masses. BTC was also a proof of concept, and the long difficulty adjustment times were at least in part a way for early miners to get even more coins... but probably two weeks just sounded "reasonable" at the time. We now know better. The new standard is KGW, and any new coin that doesn't implement KGW (or have some other way of dealing with potential coin hopping) isn't going to last.
Getting back to Vertcoin, the current network hash rate is around 2.7 GHash/sec, but since VTC is roughly twice as hard to mine (on a GPU) as normal scrypt, that's like a 5.4 GHash/sec coin. Compared to other coins, LTC is at around 100 GHash/sec and DOGE is at 78.5 GHash/sec; most other scrypt coins are in single digit GHash at best, which means VTC has already passed many of them. And that's hardly a surprise, as we've gone vertical in the last day.
We're now seeing VTC trade at 0.008 BTC, or already about one third the price of LTC. Some will call this a bubble, and perhaps it is, but I like to think this is VTC assuming it's rightful place as the number three cryptocurrency in the very near future. When the scrypt ASICs begin to arrive en masse, we'll see even more people start to look at VTC -- as well as any other non-scrypt coins. I'm sure we'll see VTC clones as well, but I'm not sure what they can offer that will be "better" than VTC. Faster transaction times? Maybe. More coins in less time? See points #3 and #4 above. They'll be a flash in the pan at best, but VTC is here to stay.
VTC: VaNuRCj73JVAwR1YMnt8CXaqoiPgykiMTk
BTC: 153qS9Ze32hnV3fwirZLWNka4wBAowc21E
LTC: LfCLyykrNFftzpdWejR73hf478ZtBzQ9jE
DOGE: DD9iTWf8diPkvKdB8roPJepTyp6BGVQtct
1) It's more resistant to ASICs
2) It has KGW so it's resistant to pools and/or large fluctuations in the number of miners
3) There was no premine or other silliness on the launch
4) It pays out slow and steady over a very long period of time.
Why shouldn't Vertcoin succeed where so many others have failed (other than the name and logo)? At present we are not even at block 30K, which means there are fewer than 1,500,000 VTC in existence. Sure, the first week or two things went a bit too fast, but now we've leveled off and for the foreseeable future we'll generate blocks every 2.5 minutes. We are 810,000 blocks away from the reward halving, and KGW means we really won't hit the halving much earlier than expected. That means 33,750 hours -- or 1406.25 days, or 3.85 years -- from now, we will have mined half of all VTC. By mining slow and steady (as opposed to, say, DOGE, which will be mined out in about 525 days since launch), we avoid the potential for a massive pump and dump.
As to the lack of a premine, even BTC had one -- Satoshi mined it with a small group of friends for about a year before it really hit the public. Wouldn't it have been nice to be one of select few (some say around 20) people mining BTC that first year? 2.6 million BTC went out to a choice few; so much for the "currency of the people" -- and no significant giveaways ever happened, at least not to a point where anywhere near 2 million BTC was distributed among the masses. BTC was also a proof of concept, and the long difficulty adjustment times were at least in part a way for early miners to get even more coins... but probably two weeks just sounded "reasonable" at the time. We now know better. The new standard is KGW, and any new coin that doesn't implement KGW (or have some other way of dealing with potential coin hopping) isn't going to last.
Getting back to Vertcoin, the current network hash rate is around 2.7 GHash/sec, but since VTC is roughly twice as hard to mine (on a GPU) as normal scrypt, that's like a 5.4 GHash/sec coin. Compared to other coins, LTC is at around 100 GHash/sec and DOGE is at 78.5 GHash/sec; most other scrypt coins are in single digit GHash at best, which means VTC has already passed many of them. And that's hardly a surprise, as we've gone vertical in the last day.
We're now seeing VTC trade at 0.008 BTC, or already about one third the price of LTC. Some will call this a bubble, and perhaps it is, but I like to think this is VTC assuming it's rightful place as the number three cryptocurrency in the very near future. When the scrypt ASICs begin to arrive en masse, we'll see even more people start to look at VTC -- as well as any other non-scrypt coins. I'm sure we'll see VTC clones as well, but I'm not sure what they can offer that will be "better" than VTC. Faster transaction times? Maybe. More coins in less time? See points #3 and #4 above. They'll be a flash in the pan at best, but VTC is here to stay.
VTC: VaNuRCj73JVAwR1YMnt8CXaqoiPgykiMTk
BTC: 153qS9Ze32hnV3fwirZLWNka4wBAowc21E
LTC: LfCLyykrNFftzpdWejR73hf478ZtBzQ9jE
DOGE: DD9iTWf8diPkvKdB8roPJepTyp6BGVQtct
Thursday, January 30, 2014
Vertcoin, Litecoin, Megacoin: Everything You Want to Know about Kimoto's Gravity Well (KGW)
After my initial post on Vertcoin last week, the difficulty started to do some interesting things. Mostly, it was reacting to miners jumping on and then off VTC, which resulted in the difficulty spiking up, then dropping down, then up again.... I didn't think we'd see that much variance thanks to the relative difficulty of getting the new VTC cgminer version running, but I was clearly wrong. Thankfully, the developers were already looking at improving the core design of VTC, and as such we have two major changes that are coming at block 26754, which should arrive some time in the next 12-16 hours.
First, the rollout schedule for changing N-Factors has been modified so that the first jump to N=12 (it's currently at N=11 while standard scrypt is N=10) will happen around early 2016. This will allow slightly older GPU hardware (think Radeon 5000 and 6000 series cards) to continue to mine VTC for two more years before it becomes potentially too demanding in terms of memory requirements.
The second change is perhaps more important: instead of the current difficulty adjustments that take place every 2016 blocks (which is what happens with BTC and LTC), VTC will be implementing Kimoto's Gravity Well (KGW). KGW is names after its creator, Dr. Kimoto Chan of Megacoin fame. The problem with difficulty adjustments is that they generally don't happen frequently enough in our modern day of cryptocurrency pool hopping and multi-coin pools. KGW fixes this by adjusting difficulty more or less after every block, avoiding huge spikes in difficulty followed by huge drops in hash rate as miners (and multi-coin pools) jump ship.
Consider the following all-too-real scenario. Coin XYZ has a network hash rate of 1GHash, with a difficulty of 1, and let's say that this coin is highly profitable right now -- maybe returns are 10X higher than mining LTC. People see this coin rise to the top of Coinwarz (or just paying attention to the cryptocurrency network), and suddenly instead of 1GHash XYZ has 50GHash. Now if the creators of the coin were perhaps short-sighted, difficulty might adjust every 2016 blocks, with a target block time of 2.5 minutes (every 3.5 days). Sound familiar?
For a sequence of up to 2016 blocks, instead of 2.5 minutes per block suddenly it's only taking 15 seconds! That won't do at all, and so at the next adjustment point the difficulty jumps from 1 to 50. Okay, normally the maximum adjustment is 4X or 8X, so after 2016 blocks at difficulty 1, there's another 2016 blocks at difficulty 4, then 2016 at difficulty 16, and now we're at difficulty 50. But for the sake of a worst-case scenario, let's just say we jump from difficulty 1 to 50.
Now suddenly the profitability of XYZ has tanked, because where it was 10 times as profitable as LTC at difficulty 1, it's now only 1/5 as profitable at difficulty 50. Everyone jumps off the bandwagon and the network hash rate drops back to 1GHash -- the core miners of XYZ. But now, with only 1GHash remaining on the network, instead of finding a block every 2.5 minutes it starts taking 125 minutes! And the next difficulty adjustment is 2016 blocks away, which instead of being 3.5 days it now requires 175 days. If this actually happened, coin XYZ is now dead, and the only options are to hard fork (an update to the client that changes the difficulty) or to just let the coin go away.
Megacoin and others have had this sort of problem, but instead of just hard coding a new difficulty, the adjustment algorithm was scrapped and KGW was created. Now the difficulty follows the hash rate in a very organic way, so if a bunch of people start mining MEC the difficulty jumps in response, and if they all leave the difficulty drops again. It doesn't happen immediately of course, but it happens within minutes or hours instead of days or weeks (or even months). VTC experience this sort of phenomenon as well, though it was "only" a jump of about 50% difficulty for three rounds straight. That took the coin from potentially earning 0.03 BTC/MH to 0.02 BTC/MH to 0.013 (more or less), and then miners went looking for greener pastures.
So now, starting with a block in the very near future, Vertcoin will be using KGW to avoid future complications. Long-term, I think VTC has a lot of potential thanks to using a different hashing function (Adjustable N-Factor Scrypt). With the addition of KGW to deal with large swings in the number of people mining VTC, it should be even better.
As an interesting aside, check out the recent LTC difficulty/hash rates. LTC went from a high of around 4000 difficulty and everyone suddenly decided to jump ship and go to more profitable coins like DOGE. The result was a huge drop in network hashing speed, so it took much longer than the usual 3.5 days for the next difficulty, which dropped all the way to 3200 or so. That still wasn't enough, apparently, so it took another 4+ days before it dropped to 2400. Suddenly, at 2400 LTC starts looking really tasty again and a bunch of miners hop back on the train, so the next sequence of blocks only takes 2.5 days and the difficulty jumps back to 3300! This is something I think we'll see a lot more going forward, and all other alt-coins better learn fast that long periods of time between difficulty changes are going to be really detrimental.
Why I mention that is that Litecoin is the original scrypt coin, and it did really well for a while, but not it's starting to look a bit rusty. There are still a lot of people mining LTC, and it's profitable, but as an example the total network hash rate on LTC is around 84GHash and DOGE is currently at 91GHash. Other alt-coins are gaining on LTC as well, though some will invariably end up as pump-and-dumps. If the currently second largest cryptocurrency in terms of market capitalization can't really deal with large mining swings, what chance do the newer/smaller coins have?
Getting back to VTC, at present you can trade it on two exchanges, and both are lesser exchanges in my book. First up and slightly better (though terribly sluggish) is CoindedUp, a "tier 3" exchange where the price is currently around 0.0004 BTC per VTC. The other option is Poloniex, a newer and hence "tier 4" exchange, where price is even lower (around 0.0003 BTC per VTC right now). The main Vertcoin page has the difficulty for VTC mining (9.9), and it's around 340 MHash. Keep in mind that most people get 40-50% of their usual scrypt hash rates with VTC, so that's the equivalent of roughly 680-850 MHash.
In terms of profitability, let's say you have a 3x280x rig that does 2.1MHash on scrypt; on VTC you should expect more like 900 KHash. That should produce about 90 VTC per day at current difficulty levels (VTC and LTC have a cool feature that let's you divide your KHash rate by the difficulty to get a decent estimate of your number of coins -- at least until the block reward drops to 25 in a few years), which works out to 0.036 BTC per day using CoinedUp. Compared to scrypt mining, that would mean you're getting around 0.017 BTC per MHash, which is pretty good.
The change to KGW incidentally is scheduled for block 26754, at which point VTC will become much more responsive to mining adjustments. That should be good for the long-term outlook, and potentially I could see VTC catch up to LTC in value. Of course, when the scrypt ASICs arrive, LTC will likely be a big target, and due to its status as the original scrypt coin it has become a medium for exchange, so I don't think VTC can catch LTC value for at least six months to a year, and perhaps never. Even so, a valuation of 0.003 (10% of LTC) is pretty reasonable, and it could become higher. We'll see. For now, I'm holding all the VTC I've mined (though I admit to jumping ship to other options, like Leasing).
BTC: 1GGJUb1gFpydygpeKzd6oFoShLRUSyThV7
LTC: LfCLyykrNFftzpdWejR73hf478ZtBzQ9jE
VTC: VaYNYUUi3amUTKQAQSs9EM4xJyNRyqnoUG
First, the rollout schedule for changing N-Factors has been modified so that the first jump to N=12 (it's currently at N=11 while standard scrypt is N=10) will happen around early 2016. This will allow slightly older GPU hardware (think Radeon 5000 and 6000 series cards) to continue to mine VTC for two more years before it becomes potentially too demanding in terms of memory requirements.
The second change is perhaps more important: instead of the current difficulty adjustments that take place every 2016 blocks (which is what happens with BTC and LTC), VTC will be implementing Kimoto's Gravity Well (KGW). KGW is names after its creator, Dr. Kimoto Chan of Megacoin fame. The problem with difficulty adjustments is that they generally don't happen frequently enough in our modern day of cryptocurrency pool hopping and multi-coin pools. KGW fixes this by adjusting difficulty more or less after every block, avoiding huge spikes in difficulty followed by huge drops in hash rate as miners (and multi-coin pools) jump ship.
Consider the following all-too-real scenario. Coin XYZ has a network hash rate of 1GHash, with a difficulty of 1, and let's say that this coin is highly profitable right now -- maybe returns are 10X higher than mining LTC. People see this coin rise to the top of Coinwarz (or just paying attention to the cryptocurrency network), and suddenly instead of 1GHash XYZ has 50GHash. Now if the creators of the coin were perhaps short-sighted, difficulty might adjust every 2016 blocks, with a target block time of 2.5 minutes (every 3.5 days). Sound familiar?
For a sequence of up to 2016 blocks, instead of 2.5 minutes per block suddenly it's only taking 15 seconds! That won't do at all, and so at the next adjustment point the difficulty jumps from 1 to 50. Okay, normally the maximum adjustment is 4X or 8X, so after 2016 blocks at difficulty 1, there's another 2016 blocks at difficulty 4, then 2016 at difficulty 16, and now we're at difficulty 50. But for the sake of a worst-case scenario, let's just say we jump from difficulty 1 to 50.
Now suddenly the profitability of XYZ has tanked, because where it was 10 times as profitable as LTC at difficulty 1, it's now only 1/5 as profitable at difficulty 50. Everyone jumps off the bandwagon and the network hash rate drops back to 1GHash -- the core miners of XYZ. But now, with only 1GHash remaining on the network, instead of finding a block every 2.5 minutes it starts taking 125 minutes! And the next difficulty adjustment is 2016 blocks away, which instead of being 3.5 days it now requires 175 days. If this actually happened, coin XYZ is now dead, and the only options are to hard fork (an update to the client that changes the difficulty) or to just let the coin go away.
Megacoin and others have had this sort of problem, but instead of just hard coding a new difficulty, the adjustment algorithm was scrapped and KGW was created. Now the difficulty follows the hash rate in a very organic way, so if a bunch of people start mining MEC the difficulty jumps in response, and if they all leave the difficulty drops again. It doesn't happen immediately of course, but it happens within minutes or hours instead of days or weeks (or even months). VTC experience this sort of phenomenon as well, though it was "only" a jump of about 50% difficulty for three rounds straight. That took the coin from potentially earning 0.03 BTC/MH to 0.02 BTC/MH to 0.013 (more or less), and then miners went looking for greener pastures.
So now, starting with a block in the very near future, Vertcoin will be using KGW to avoid future complications. Long-term, I think VTC has a lot of potential thanks to using a different hashing function (Adjustable N-Factor Scrypt). With the addition of KGW to deal with large swings in the number of people mining VTC, it should be even better.
As an interesting aside, check out the recent LTC difficulty/hash rates. LTC went from a high of around 4000 difficulty and everyone suddenly decided to jump ship and go to more profitable coins like DOGE. The result was a huge drop in network hashing speed, so it took much longer than the usual 3.5 days for the next difficulty, which dropped all the way to 3200 or so. That still wasn't enough, apparently, so it took another 4+ days before it dropped to 2400. Suddenly, at 2400 LTC starts looking really tasty again and a bunch of miners hop back on the train, so the next sequence of blocks only takes 2.5 days and the difficulty jumps back to 3300! This is something I think we'll see a lot more going forward, and all other alt-coins better learn fast that long periods of time between difficulty changes are going to be really detrimental.
Why I mention that is that Litecoin is the original scrypt coin, and it did really well for a while, but not it's starting to look a bit rusty. There are still a lot of people mining LTC, and it's profitable, but as an example the total network hash rate on LTC is around 84GHash and DOGE is currently at 91GHash. Other alt-coins are gaining on LTC as well, though some will invariably end up as pump-and-dumps. If the currently second largest cryptocurrency in terms of market capitalization can't really deal with large mining swings, what chance do the newer/smaller coins have?
Getting back to VTC, at present you can trade it on two exchanges, and both are lesser exchanges in my book. First up and slightly better (though terribly sluggish) is CoindedUp, a "tier 3" exchange where the price is currently around 0.0004 BTC per VTC. The other option is Poloniex, a newer and hence "tier 4" exchange, where price is even lower (around 0.0003 BTC per VTC right now). The main Vertcoin page has the difficulty for VTC mining (9.9), and it's around 340 MHash. Keep in mind that most people get 40-50% of their usual scrypt hash rates with VTC, so that's the equivalent of roughly 680-850 MHash.
In terms of profitability, let's say you have a 3x280x rig that does 2.1MHash on scrypt; on VTC you should expect more like 900 KHash. That should produce about 90 VTC per day at current difficulty levels (VTC and LTC have a cool feature that let's you divide your KHash rate by the difficulty to get a decent estimate of your number of coins -- at least until the block reward drops to 25 in a few years), which works out to 0.036 BTC per day using CoinedUp. Compared to scrypt mining, that would mean you're getting around 0.017 BTC per MHash, which is pretty good.
The change to KGW incidentally is scheduled for block 26754, at which point VTC will become much more responsive to mining adjustments. That should be good for the long-term outlook, and potentially I could see VTC catch up to LTC in value. Of course, when the scrypt ASICs arrive, LTC will likely be a big target, and due to its status as the original scrypt coin it has become a medium for exchange, so I don't think VTC can catch LTC value for at least six months to a year, and perhaps never. Even so, a valuation of 0.003 (10% of LTC) is pretty reasonable, and it could become higher. We'll see. For now, I'm holding all the VTC I've mined (though I admit to jumping ship to other options, like Leasing).
BTC: 1GGJUb1gFpydygpeKzd6oFoShLRUSyThV7
LTC: LfCLyykrNFftzpdWejR73hf478ZtBzQ9jE
VTC: VaYNYUUi3amUTKQAQSs9EM4xJyNRyqnoUG
An Alternative to Mining: Leasing
This continues from where I left off yesterday, where I mentioned there are potentially ways to make far more than 0.015 BTC per MHash on scrypt coins. Or, if you find a hot new coin and you want to throw everything you have and then some at it, you can do that as well! The service is called LeaseRig.net, and in the past two days I've played both sides, leasing my rigs to others as well as paying rent to get more hashing power.
Before I get into the details, let me be frank: paying 0.03 BTC per MHash to rent somebody's rig seems awfully crazy to me. I rented roughly 50 MHash of power yesterday to try and grab a whole bunch of LEAF coins, and while I definitely ended up with a lot of LEAF, at the current value it was a losing gamble -- I could have spent 2 BTC and purchased 10 million LEAF, whereas with leasing and mining I only earned about 70% of that target.
On the other hand, I actually learned about LEAF through the leasing program, as several of my rigs were rented and ended up mining LEAF. "What's so hot about this new coin?" I wondered, so I went and checked it out and found that the previous day, people were earning nearly a million LEAF per MHash, and at an exchange rate of 0.00000015 BTC per LEAF that worked out to 0.15 BTC per MHash. Naturally, that brought in a whole bunch of miners and difficulty quickly ramped up, but even now LEAF is generating pretty decent returns. Other coins I've seen being mined: Coino, PXLcoin, Tittiecoin, Potcoin, and Swagcoin -- but I'm not going to explicitly recommend any of those and in particular the launch of SWAG was a joke.
Long story short, you can play both sides of the LeaseRig "game" -- actually paying others for the use of their rigs is a bit more risky, whereas if you want to be conservative but still generate a higher-than-normal rate of return, it's not unusual to get upwards of 0.02 BTC per MHash, and if there's a popular new coin you could get 0.03 or higher lease prices. The great part is that when your rig isn't being leased, it can go back to mining for you, and you can even manage the pools remotely through LeaseRig. The bad news is that at present the interface only allows you to list up to two default pools -- I'd like at least three or four.
Now if you're interested, I'm not going to spend a ton of time explaining how to get things working with LeaseRig, as there's a How To Guide already. The process involves PM'ing the operator of the site, djeZo, on the Bitcointalk.org forums, potentially making a security deposit with him (if you're new), and then you need to set up an account with some place like NoIP. From there, you also need to configure your router via Port Forwarding, and edit your cgminer.conf settings to allow his server to talk to your rig. Let me also suggest that you back up your current cgminer.conf file (or if you're using some other file name, copy that to cgminer.conf and use that instead). You can still use CGWatcher or other utilities in most cases, and if you know enough to figure all of this stuff out, you're probably ready to get listed on LeaseRig.
If you'd like to try the service out as a renter rather than leaser, feel free to try one of my systems (trogdorjw73) -- I've kept them reasonably priced right now, at roughly 0.025 BTC per MH. And as usual, let me end by saying at that rate, a $2000 rig like the one I listed yesterday that does 2000KHash could generate 0.05 BTC per day and 1.5 BTC per month. If you can consistently get that sort of ROI, you'll pay for the rig in under two months!
BTC: 1GGJUb1gFpydygpeKzd6oFoShLRUSyThV7
LTC: LfCLyykrNFftzpdWejR73hf478ZtBzQ9jE
Before I get into the details, let me be frank: paying 0.03 BTC per MHash to rent somebody's rig seems awfully crazy to me. I rented roughly 50 MHash of power yesterday to try and grab a whole bunch of LEAF coins, and while I definitely ended up with a lot of LEAF, at the current value it was a losing gamble -- I could have spent 2 BTC and purchased 10 million LEAF, whereas with leasing and mining I only earned about 70% of that target.
On the other hand, I actually learned about LEAF through the leasing program, as several of my rigs were rented and ended up mining LEAF. "What's so hot about this new coin?" I wondered, so I went and checked it out and found that the previous day, people were earning nearly a million LEAF per MHash, and at an exchange rate of 0.00000015 BTC per LEAF that worked out to 0.15 BTC per MHash. Naturally, that brought in a whole bunch of miners and difficulty quickly ramped up, but even now LEAF is generating pretty decent returns. Other coins I've seen being mined: Coino, PXLcoin, Tittiecoin, Potcoin, and Swagcoin -- but I'm not going to explicitly recommend any of those and in particular the launch of SWAG was a joke.
Long story short, you can play both sides of the LeaseRig "game" -- actually paying others for the use of their rigs is a bit more risky, whereas if you want to be conservative but still generate a higher-than-normal rate of return, it's not unusual to get upwards of 0.02 BTC per MHash, and if there's a popular new coin you could get 0.03 or higher lease prices. The great part is that when your rig isn't being leased, it can go back to mining for you, and you can even manage the pools remotely through LeaseRig. The bad news is that at present the interface only allows you to list up to two default pools -- I'd like at least three or four.
Now if you're interested, I'm not going to spend a ton of time explaining how to get things working with LeaseRig, as there's a How To Guide already. The process involves PM'ing the operator of the site, djeZo, on the Bitcointalk.org forums, potentially making a security deposit with him (if you're new), and then you need to set up an account with some place like NoIP. From there, you also need to configure your router via Port Forwarding, and edit your cgminer.conf settings to allow his server to talk to your rig. Let me also suggest that you back up your current cgminer.conf file (or if you're using some other file name, copy that to cgminer.conf and use that instead). You can still use CGWatcher or other utilities in most cases, and if you know enough to figure all of this stuff out, you're probably ready to get listed on LeaseRig.
If you'd like to try the service out as a renter rather than leaser, feel free to try one of my systems (trogdorjw73) -- I've kept them reasonably priced right now, at roughly 0.025 BTC per MH. And as usual, let me end by saying at that rate, a $2000 rig like the one I listed yesterday that does 2000KHash could generate 0.05 BTC per day and 1.5 BTC per month. If you can consistently get that sort of ROI, you'll pay for the rig in under two months!
BTC: 1GGJUb1gFpydygpeKzd6oFoShLRUSyThV7
LTC: LfCLyykrNFftzpdWejR73hf478ZtBzQ9jE
Wednesday, January 29, 2014
Mining for Profit and Learning
I'm always on the lookout for new ways to make my mining rigs generate money. I know, that's sort of bass-ackwards -- we're supposed to be promoting cryptocurrencies, not mining cryptocurrencies so we can exchange them for fiat, right? RIGHT!? Well, maybe that's true for some of you, but for me I have bills (and debts) to pay, so I've definitely exchanged plenty of BTC/LTC/alt-coins for cold, hard USD, and I suspect the same holds true for many of you. Unless you have enough money that going out and buying thousands of dollars of mining hardware isn't a problem, then investing money into cryptocurrencies is at best a risky business. Which brings me to the point of this post.
Hypothetically, just to keep things simple let's say that you have 10,000 KHash of scrypt mining hardware at your disposal. Hopefully all of you are familiar by now with Coinwarz.com, Coinchoose,com, or some similar site -- and if you're not, you should be! I like Coinwarz as it let's you compare profitability to LTC, which is far more useful than looking at profitability vs. BTC mining since no one (smart) does that with GPUs anymore. Coinchoose does have a Litecoin comparison page, but for reasons I can't fathom it omits many/most of the scrypt coins and still includes several SHA256 coins. Seriously, what? Anyway, let's run some quick figures on Coinwarz with our 10,000 KHash:
Okay, that's a huge image and I apologize that I needed something like that. Obviously the exchange rates and mining difficulty are all in constant flux, so you can't base your choice of what to mine off of the above. But looking at this snapshot in time, we can see that there are some coins that look really profitable right now, but over the past fourteen days they're actually not that great -- PHS, ALF, FRK, and CAP are all in this category. On the other hand, we have coins that are currently not as profitable as their two-week average -- RPC, DOGE, and LOT fall into this group. So what do you mine?
So if you're mining alt-coins, at the current difficulty/exchange rate you could mine coins and then trade for BTC at the following rates (which are different from the above image), and I'll include LTC as the baseline since it's the one we have to beat in my book:
We've been over this before, but the basic idea is that you could build five systems capable of doing 10MHash+ total for roughly $10,000. If that's your investment, most of you would be pretty pleased to recover your money and begin making profit in three or four months, right? But what if I told you there are ways where you could double the best return on that list, on a fairly consistent basis? Yes, we're talking about 0.03 BTC per MHash of scrypt mining, so at $800 per BTC (an estimate given current prices), you would pay off a $10,000 investment in about 42 days! And what if the difficulty/exchange rate of the various alt-coins wasn't really a consideration?
I've caught your interest I hope, but I'm going to stop here for now -- I'll reveal why tomorrow. But let's just say that first, there are coins not yet listed on Coinwarz, and sometimes not even an any exchanges, and mining these early can reap huge benefits (albeit with some risk). That's one option, but for the other let me ask a question: Who made the most money on average during the Gold Rush of the 1800s? The answer to that leads into the answer of what to mine and how to do it...tomorrow. For now, here's my current pick of hardware for a $10,000 investment:
The biggest change here is a move to an Extended ATX motherboard (the Gigabyte GA-990FXA-UD7), which comes with six x16 slots and will allow you to do one of two things: either run up to six GPUs with risers (note that you'll need more and/or beefier power supplies!), or short-term you could actually run it with three GPUs without risers and still get two slots between each pair of GPUs. $234 is a lot of money to spend on a motherboard, but with x16 risers now going for $20 each that's $60 for three GPUs that you save, and you still have room to expand in the future. The UD3 and UD5 are less expensive alternatives, with the UD3 being standard ATX and it comes with four x16 slots, while the UD5 is also an ATX board but it comes with five x16 slots.
The other change is the recommendation to build your own case using either wood or PVC pipes, both of which are relatively inexpensive and easy to procure. My next case I've decided to go with wood -- I'll take pictures when it's done. It may not look as classy as an aluminum frame cage, but almost everyone has easy access to wood, a circular saw, a hammer, and nails -- and since wood doesn't conduct there's less risk of shorting out your motherboard if you're not careful with the mounting. Just make sure you have adequate airflow so nothing catches fire. :-)
Hypothetically, just to keep things simple let's say that you have 10,000 KHash of scrypt mining hardware at your disposal. Hopefully all of you are familiar by now with Coinwarz.com, Coinchoose,com, or some similar site -- and if you're not, you should be! I like Coinwarz as it let's you compare profitability to LTC, which is far more useful than looking at profitability vs. BTC mining since no one (smart) does that with GPUs anymore. Coinchoose does have a Litecoin comparison page, but for reasons I can't fathom it omits many/most of the scrypt coins and still includes several SHA256 coins. Seriously, what? Anyway, let's run some quick figures on Coinwarz with our 10,000 KHash:
So if you're mining alt-coins, at the current difficulty/exchange rate you could mine coins and then trade for BTC at the following rates (which are different from the above image), and I'll include LTC as the baseline since it's the one we have to beat in my book:
| Coin Name (Symbol) | Rate in BTC per MHash | Monthly Earnings from 10 MHash/sec |
| Litecoin (LTC) | 0.00918 BTC | ~$2203 USD |
| RonPaulCoin (RPC) | 0.01057 BTC | ~$2537 USD |
| Lottocoin (LOT) | 0.01225 BTC | ~$2940 USD |
| Worldcoin (WDC) | 0.01300 BTC | ~$3120 USD |
| Dogecoin (DOGE) | 0.0133 BTC | ~$3192 USD |
| Fastcoin (FST) | 0.01437 BTC | ~$3449 USD |
| Neocoin (NEC) | 0.01502 BTC | ~$3605 USD |
I've caught your interest I hope, but I'm going to stop here for now -- I'll reveal why tomorrow. But let's just say that first, there are coins not yet listed on Coinwarz, and sometimes not even an any exchanges, and mining these early can reap huge benefits (albeit with some risk). That's one option, but for the other let me ask a question: Who made the most money on average during the Gold Rush of the 1800s? The answer to that leads into the answer of what to mine and how to do it...tomorrow. For now, here's my current pick of hardware for a $10,000 investment:
| Component | Description | Price |
| Motherboard | Gigabyte GA-990FXA-UD3/UD5/UD7 AM3+ | $145-$234 USD |
| Processor | AMD FX-8320 Vishera | $156 USD |
| Memory | Crucial Ballistix Sport 4GBx2 DDR3-1600 | $73 USD |
| GPUs | 3 x Radeon R9 280X 3GB | $1200 USD |
| Power Supply | 2 x Rosewill Capstone 750W 80 Plus Gold | $200 USD |
| Storage | 2.5" 60GB Kingston V3 SSD | $63 USD |
| Case? | Build it out of wood or PVC pipes! | $40 USD |
| Total Cost | $1877-$1966 | |
The other change is the recommendation to build your own case using either wood or PVC pipes, both of which are relatively inexpensive and easy to procure. My next case I've decided to go with wood -- I'll take pictures when it's done. It may not look as classy as an aluminum frame cage, but almost everyone has easy access to wood, a circular saw, a hammer, and nails -- and since wood doesn't conduct there's less risk of shorting out your motherboard if you're not careful with the mounting. Just make sure you have adequate airflow so nothing catches fire. :-)
Friday, January 24, 2014
Vertcoin: About to Go Vertical?
I mentioned Vertcoin a few days back, but at the time I was busy and didn't really give the coin a real chance. I like that it uses the same basic payout structure as Litecoin (50 coin blocks, dropping approximately every four years, with a total of 84 million VTC eventually). I also like the idea of trying to be ASIC resistant. So what don't I like? Well, mostly I don't like having to play with conf files to get all of my rigs properly mining VTC, I don't like that my miners tend to get SICK GPUs more often, and I don't like that most of the VTC pools are somewhat unstable right now -- it's not uncommon for several of the mining pools to be slow/down at once!
If that's the bad, what's the good? For one, given the reward structure and the fact that there's no pre-mine, Vertcoin could end up looking a lot like Litecoin. Right now that means over $20 per VTC is a reasonable target, but it could take a while to get there. But make no mistake, Vertcoin is picking up steam! When I first discussed VTC just four days ago, the difficulty was at 2.097. Given that VTC is similar to LTC, you can divide your KHash rate by the difficulty to get a reasonable estimate of the number of VTC you can mine in a day, so with 1800KHash/sec you would have mined around 850 VTC in a single day. Well, a day later VTC hit the next 2016 block milestone and difficulty jumped to 5.652 -- and not surprisingly, the trading price of VTC had increased as well.
In the meantime, DOGE has been going crazy, so I even switched some miners from Hashco.ws and Middlecoin over to straight DOGE mining, and it's been doing pretty well -- and so have the multi-coin pools, really. But then yesterday, I looked at VTC again and did some quick math. Even at 40% of the hash rate of mining scrypt coins (the adaptive N-Factor algorithm used in VTC makes mining more difficult), at the current exchange rates mining VTC might actually be more profitable than mining DOGE or any of the other scrypt alt-coins. Here's the math:
If that's not enough to get you thinking VTC is taking off, consider a few other tidbits. First, the exchange rates on VTC have bumped from 0.00016 BTC per VTC four days ago to 3-4 times that much (currently 0.00051), and I don't expect them to fall back any time soon. The people mining VTC right now tend to be seasoned veterans, as it takes more work to get up and running compared to all the scypt-based coins -- more on that in a moment -- so they're not inclined to sell. I know I'm not selling my VTC for example, because when the exchange rate has more than tripled in just four days you hold and wait for things to level off. Second point: there's no multi-coin pool mining of VTC right now, since it uses it's own customized Proof of Work algorithm, which means you don't see big dumps of coins throughout the day from Middlecoin, Hashco.ws, etc. And last but not least, I'm writing about Vertcoin and there are at least a few hundred people reading this, which means more people mining VTC and holding, which means I expect a small bump just because of this post.
There are other things I could probably get into as well, but suffice it to say that right now, I think Vertcoin is about to take off -- or rather, it's already taking off, and my one big regret today is that I didn't shift my four main mining rigs over to VTC four days ago! Had I done so, I would currently be sitting on something like 2200 VTC after four or so days of mining, which would currently be worth over 1 BTC. Instead, I stayed with Middlecoin during that time and made a reasonable 0.25 BTC (give or take).
So you've read all of this and now you're wondering: how do I get up and running on mining Vertcoin? It's pretty similar to other coins, and Vertcoin.com has most of the needed information, but there are a couple of items of note. First, you need to download the custom version of CGminer, which has been tweaked to work with the scrypt adaptive-N-Factor algorithm. Second, I can pretty much guarantee that if you run the VTC cgminer with your current scrypt settings, one of several things will happen: either it won't work at all, your system will crash (or at least be unstable), you'll get lots of hardware errors and no accepted shares, or you'll actually successfully mine VTC but not at anything near the expected rate. Here's my input on what to do to get things to work, based on my experience with mining on HD 7950 and HD 6970 cards.
First, you need to lower your thread concurrency. I haven't found an "ideal" setting yet, but I can tell you that on my 7950 cards I dropped from 21584 to 14712, and that seems to work "okay" -- I'm getting roughly 250KHash per 7950. On my 6970 cards, I likewise dropped from TC of 8000 to 6000, and they're also getting around 250KHash -- so yeah, my old Cayman GPUs are doing a good job of keeping up with Tahiti! Not bad for a $350 investment last month off of Craigslist! :-) The second thing you'll probably need to do is to adjust your GPU and RAM clocks down a notch. If you were able to run at 1025/1575 on a 7950 with scrypt, you may find that decent stability with VTC only comes at 975/1500.
And what about R9 290/R9 290X? Well, I'm still trying to get those working well. Some are reporting rates of around 400KHash with 290X and 350KHash with 290, but as usual every system is different. Also, the cgminer BSOD on exit glitch is back with the customized VTC-cgminer, so that makes things a bit of a pain in the butt. I've been able to get all of my 7950 GPUs and 6970 GPUs running VTC without too much difficulty, but R9 290X isn't going as well. Hopefully I can fix that today, and if so I'll post back.
Something else to mention is that setting up failover pools with cgminer is a really good idea, especially since the VTC pools seem to be less stable than many of the scrypt pools I've used. I created accounts at four of the pools, but one of the pools (Kilovolt) doesn't appear to be accepting additional users right now, since they have over 33% of the current VTC hashing power -- which is very responsible of them. That leaves the other big pools as vertcoin.org, bitcrush.info, and vertco.in, or you could spread things out to some of the smaller pools. I actually started on pool.pm, but have since pushed them down my list of pools as their pool was unstable and the hashing rate dropped quite a bit, resulting in fewer found blocks and somewhat poor results. Anyway, I suspect we'll see many more VTC pools start coming online in the coming months.
Last but not least, you can still use the custom version of cgminer with utilities like CGWatcher. I've found cgminer-vertcoin takes a bit longer to start mining sometimes, but otherwise it works about the same as before. I did configure CGWatcher to reboot my computer(s) if any of the GPUs gets "SICK", which has been happening far more often than when I was mining scrypt coins -- in fact, I was at the point where my GPUs almost never got SICK, but now some of my rigs seem to get sick and reboot every hour or two! But even with the rebooting taking the mining rig offline for a minute or two, VTC is still resulting in better ROI than Middlecoin, so I'm sticking with it.
As a final comment, based on some discussions on the VTC thread, there's a question of the length of time between difficulty adjustments. This has killed (at least temporarily) a few coins, RonPaulCoin being a prime example. One of the reason other alt-coins are having huge problems with hashrate spikes is because of the multi-coin pools (e.g. Hashco.ws, Middlecoin, etc.) They'll hop on a profitable alt-coin for 10, 15, 60, whatever minutes and then move away when the difficulty vs. price is no longer favorable. RPC has a current network hash rate of 228MHash, so when Hashco.ws jumps on with 1GHash, it's a huge problem. (RPC has introduced a fix that will occur in the next day or two where the time between difficulty adjustments will be much lower.) To a lesser degree, this can also happen with individual users jumping on a profitable coin en masse until difficulty adjustment makes it unprofitable, leaving the coin in the hands of the few stalwarts to plug through the slow blocks left behind.
Anyway, right now there's no potential for multi-coin pools to mine VTC because you need to run a custom version of cgminer that targets the different PoW algorithm. Of course, if a bunch of copycat coins start using the same PoW algo (Scrypt-Adaptive-N-Factor or whatever we're calling it) or the necessary support gets rolled into a single cgminer executable, then VTC may have problems. Anyway, I certainly don't mind the idea of shorter rounds and/or faster confirmations. 2016 blocks between adjustments was a figure chosen because two weeks sounded like a good idea back in 2008 or whatever. Now, I'd agree that block adjustment times have no need of being measured in days let alone weeks. With 2.5 minute average block times, I wouldn't be opposed to VTC being modified to adjust difficulty every 24 or 48 blocks (around one or two hours).
Update: The VTC devs are running a couple polls regarding the N-Factor adjustment schedule and their implementation of Kimoto's Gravity Well. If you have strong feelings on either one, go vote. My personal take: implement KGW as soon as possible and be done with it! For N-Factor, any of the options are fine.
If you find all of this information useful, I'm always happy to accept donations. (If you want to donate something else, send me a message and I can list other coin addresses as well!) Thanks!
BTC: 1GGJUb1gFpydygpeKzd6oFoShLRUSyThV7
LTC: LfCLyykrNFftzpdWejR73hf478ZtBzQ9jE
VTC: VaYNYUUi3amUTKQAQSs9EM4xJyNRyqnoUG
If that's the bad, what's the good? For one, given the reward structure and the fact that there's no pre-mine, Vertcoin could end up looking a lot like Litecoin. Right now that means over $20 per VTC is a reasonable target, but it could take a while to get there. But make no mistake, Vertcoin is picking up steam! When I first discussed VTC just four days ago, the difficulty was at 2.097. Given that VTC is similar to LTC, you can divide your KHash rate by the difficulty to get a reasonable estimate of the number of VTC you can mine in a day, so with 1800KHash/sec you would have mined around 850 VTC in a single day. Well, a day later VTC hit the next 2016 block milestone and difficulty jumped to 5.652 -- and not surprisingly, the trading price of VTC had increased as well.
In the meantime, DOGE has been going crazy, so I even switched some miners from Hashco.ws and Middlecoin over to straight DOGE mining, and it's been doing pretty well -- and so have the multi-coin pools, really. But then yesterday, I looked at VTC again and did some quick math. Even at 40% of the hash rate of mining scrypt coins (the adaptive N-Factor algorithm used in VTC makes mining more difficult), at the current exchange rates mining VTC might actually be more profitable than mining DOGE or any of the other scrypt alt-coins. Here's the math:
DOGE @ 4500 KHash/sec and a difficulty (right now) of 1264.47 will generate around 36000 DOGE per day. (Note: DOGE block reward is set to halve in the next few weeks.) At the current exchange rate (which has jumped of late), that works out to 0.08 BTC per day after trading.
VTC @ 1800 KHash/sec (40% of the regular scrypt hashing rate due to higher N-Factor) and the current difficulty of 7.953 (yes, difficulty just jumped by over 50% yesterday) will generate around 225 VTC per day, and at the current exchange rate (which is a bit volatile) that works out to 0.115 BTC per day.Wow. DOGE is flying high right now, no doubt, and profits on Middlecoin are up thanks to this fact. However, at present VTC is outperforming DOGE by over 40%. And what about Litecoin, which has had a recent drop in difficulty from nearly 4000 to 3130, with the next difficulty projection being under 2600? Mining LTC directly at present with 8000 KHash would net you 0.065 BTC per day after trading, so VTC is almost twice as profitable as LTC right now. That means if you were to go out and buy a system with three R9 280X GPUs for around $2000, you could recover your initial investment in under two months.
If that's not enough to get you thinking VTC is taking off, consider a few other tidbits. First, the exchange rates on VTC have bumped from 0.00016 BTC per VTC four days ago to 3-4 times that much (currently 0.00051), and I don't expect them to fall back any time soon. The people mining VTC right now tend to be seasoned veterans, as it takes more work to get up and running compared to all the scypt-based coins -- more on that in a moment -- so they're not inclined to sell. I know I'm not selling my VTC for example, because when the exchange rate has more than tripled in just four days you hold and wait for things to level off. Second point: there's no multi-coin pool mining of VTC right now, since it uses it's own customized Proof of Work algorithm, which means you don't see big dumps of coins throughout the day from Middlecoin, Hashco.ws, etc. And last but not least, I'm writing about Vertcoin and there are at least a few hundred people reading this, which means more people mining VTC and holding, which means I expect a small bump just because of this post.
There are other things I could probably get into as well, but suffice it to say that right now, I think Vertcoin is about to take off -- or rather, it's already taking off, and my one big regret today is that I didn't shift my four main mining rigs over to VTC four days ago! Had I done so, I would currently be sitting on something like 2200 VTC after four or so days of mining, which would currently be worth over 1 BTC. Instead, I stayed with Middlecoin during that time and made a reasonable 0.25 BTC (give or take).
So you've read all of this and now you're wondering: how do I get up and running on mining Vertcoin? It's pretty similar to other coins, and Vertcoin.com has most of the needed information, but there are a couple of items of note. First, you need to download the custom version of CGminer, which has been tweaked to work with the scrypt adaptive-N-Factor algorithm. Second, I can pretty much guarantee that if you run the VTC cgminer with your current scrypt settings, one of several things will happen: either it won't work at all, your system will crash (or at least be unstable), you'll get lots of hardware errors and no accepted shares, or you'll actually successfully mine VTC but not at anything near the expected rate. Here's my input on what to do to get things to work, based on my experience with mining on HD 7950 and HD 6970 cards.
First, you need to lower your thread concurrency. I haven't found an "ideal" setting yet, but I can tell you that on my 7950 cards I dropped from 21584 to 14712, and that seems to work "okay" -- I'm getting roughly 250KHash per 7950. On my 6970 cards, I likewise dropped from TC of 8000 to 6000, and they're also getting around 250KHash -- so yeah, my old Cayman GPUs are doing a good job of keeping up with Tahiti! Not bad for a $350 investment last month off of Craigslist! :-) The second thing you'll probably need to do is to adjust your GPU and RAM clocks down a notch. If you were able to run at 1025/1575 on a 7950 with scrypt, you may find that decent stability with VTC only comes at 975/1500.
And what about R9 290/R9 290X? Well, I'm still trying to get those working well. Some are reporting rates of around 400KHash with 290X and 350KHash with 290, but as usual every system is different. Also, the cgminer BSOD on exit glitch is back with the customized VTC-cgminer, so that makes things a bit of a pain in the butt. I've been able to get all of my 7950 GPUs and 6970 GPUs running VTC without too much difficulty, but R9 290X isn't going as well. Hopefully I can fix that today, and if so I'll post back.
Something else to mention is that setting up failover pools with cgminer is a really good idea, especially since the VTC pools seem to be less stable than many of the scrypt pools I've used. I created accounts at four of the pools, but one of the pools (Kilovolt) doesn't appear to be accepting additional users right now, since they have over 33% of the current VTC hashing power -- which is very responsible of them. That leaves the other big pools as vertcoin.org, bitcrush.info, and vertco.in, or you could spread things out to some of the smaller pools. I actually started on pool.pm, but have since pushed them down my list of pools as their pool was unstable and the hashing rate dropped quite a bit, resulting in fewer found blocks and somewhat poor results. Anyway, I suspect we'll see many more VTC pools start coming online in the coming months.
Last but not least, you can still use the custom version of cgminer with utilities like CGWatcher. I've found cgminer-vertcoin takes a bit longer to start mining sometimes, but otherwise it works about the same as before. I did configure CGWatcher to reboot my computer(s) if any of the GPUs gets "SICK", which has been happening far more often than when I was mining scrypt coins -- in fact, I was at the point where my GPUs almost never got SICK, but now some of my rigs seem to get sick and reboot every hour or two! But even with the rebooting taking the mining rig offline for a minute or two, VTC is still resulting in better ROI than Middlecoin, so I'm sticking with it.
As a final comment, based on some discussions on the VTC thread, there's a question of the length of time between difficulty adjustments. This has killed (at least temporarily) a few coins, RonPaulCoin being a prime example. One of the reason other alt-coins are having huge problems with hashrate spikes is because of the multi-coin pools (e.g. Hashco.ws, Middlecoin, etc.) They'll hop on a profitable alt-coin for 10, 15, 60, whatever minutes and then move away when the difficulty vs. price is no longer favorable. RPC has a current network hash rate of 228MHash, so when Hashco.ws jumps on with 1GHash, it's a huge problem. (RPC has introduced a fix that will occur in the next day or two where the time between difficulty adjustments will be much lower.) To a lesser degree, this can also happen with individual users jumping on a profitable coin en masse until difficulty adjustment makes it unprofitable, leaving the coin in the hands of the few stalwarts to plug through the slow blocks left behind.
Anyway, right now there's no potential for multi-coin pools to mine VTC because you need to run a custom version of cgminer that targets the different PoW algorithm. Of course, if a bunch of copycat coins start using the same PoW algo (Scrypt-Adaptive-N-Factor or whatever we're calling it) or the necessary support gets rolled into a single cgminer executable, then VTC may have problems. Anyway, I certainly don't mind the idea of shorter rounds and/or faster confirmations. 2016 blocks between adjustments was a figure chosen because two weeks sounded like a good idea back in 2008 or whatever. Now, I'd agree that block adjustment times have no need of being measured in days let alone weeks. With 2.5 minute average block times, I wouldn't be opposed to VTC being modified to adjust difficulty every 24 or 48 blocks (around one or two hours).
Update: The VTC devs are running a couple polls regarding the N-Factor adjustment schedule and their implementation of Kimoto's Gravity Well. If you have strong feelings on either one, go vote. My personal take: implement KGW as soon as possible and be done with it! For N-Factor, any of the options are fine.
If you find all of this information useful, I'm always happy to accept donations. (If you want to donate something else, send me a message and I can list other coin addresses as well!) Thanks!
BTC: 1GGJUb1gFpydygpeKzd6oFoShLRUSyThV7
LTC: LfCLyykrNFftzpdWejR73hf478ZtBzQ9jE
VTC: VaYNYUUi3amUTKQAQSs9EM4xJyNRyqnoUG
Monday, January 20, 2014
Scrypt ASICs, Alternate Proof of Work Algorithms, etc.
I wanted to quickly touch on a couple of topics in the cryptocurrency world, and perhaps it's best to start with a short discussion of ASICs. Litecoin and the scrypt Proof of Work (PoW) algorithm were created in part as a way to avoid concentrating the hashing power and control of any cryptocurrency into the hands of a few (relatively speaking) people. When everyone was using CPUs to mine Bitcoins (SHA256 PoW), it was a "fair" game -- anyone with a PC could participate. Then BTC started to gain some fame back in late 2010/early 2011 and some clever programmers decided to try and use GPUs to run the SHA256 hashing algorithm, and they had some good success. Where a high-end CPU might get 15-20MHash/sec, a high-end GPU could run the calculations about 20X faster, and suddenly people were in a rush to buy GPUs so they could grab more of the Bitcoin pie.
Even GPUs are still less efficient than a processor designed specifically to run SHA256, however, and the inevitable next step was to work on FPGAs (Field Programmable Gate Arrays) and ASICs (Application Specific Integrated Circuit). FPGAs are basically a quick and dirty way to do a custom chip, with the caveat being that they'll never be as fast as a custom design -- they don't clock as high, because the gate arrays can't switch as fast. FPGAs could run about as fast as a high-end GPU back in 2011, but they cost almost twice as much -- and they used about 1/10 as much power. Custom ASICs on the other hand would take a lot more time to develop, and they would require a significant investment in terms of R&D, layout, fabrication, packaging, etc.
Eventually we started to see ASICs designed for SHA256 become widely available in early 2013, and the result has been an exponential increase in hashing power. Today, a good ASIC miner will perform around 1000GHash/sec and draw around 850W of power -- about 400X as efficient as trying to mine BTC with a GPU! The problem is that supply of ASICs hasn't kept up with demand, so there are relatively few companies/people with ASICs controlling the Bitcoin network. Worst-case, we could end up with one company controlling over 50% of the network, in which case they could basically steal BTC by forging transactions. I don't think we're likely to see that happen -- there's too much money invested into BTC at this point, and any company getting even 25% of the total hash rate will likely stop expanding so as not to spook other investors. But it still means that this "currency for the people" has ended up in the control of a relatively small number of hands, which is not what it was supposed to do.
So then we have scrypt, which is an alternate Proof of Work that can't be mined with ASICs designed for SHA256. With the success of Bitcoin and now Litecoin, however, there is plenty of interest in being the first company to deliver a scrypt ASIC. Probably the most well-known is Alpha Technologies, who are currently targeting a release date of mid-July for a 25MHash/sec scrypt ASIC that will draw less than 600W (and potentially less than 300W). To put that in perspective, it's the equivalent of 30 Radeon R9 290X GPUs but draws as much power as two such GPUs -- or roughly 15X as efficient as using a GPU. That's not quite as big of a gap as we're seeing with SHA256, since scrypt was intentionally designed to make the creation of ASICs more difficulty, but it's still a healthy advantage.
The big catch is the cost, of course. The Viper 25MHash miner has a price of £5450, or around $9000 USD. Even at the currently inflated prices on GPUs, $9000 could purchase around six complete mining rigs, each with three R9 280X GPUs, for a total hashing power of around 13MHash/sec. That's about half the performance, but you could begin hashing within a week compared to waiting six months, and six months is a very long time in the cryptocurrency world. I went in on half of a Viper with a friend, and we'll see if that works out, but I suspect it will be a while yet before that investment pays off. It will certainly be interesting to see what sort of ASIC arms race comes in the scrypt world, regardless, as Alpha Technologies is actually jumping straight to 28nm process technology whereas the SHA256 ASICs started at 110nm, so we may not actually see quite the explosion in hashing rate that Bitcoin saw.
So this brings us to the alternative Proof of Work algorithms. I really liked the idea of Quark, but it was basically insta-mined so that if you didn't hop on board in the first month or two, you were "too late" to really make a decent profit. This is why I started mining Frozen, but while I have mined a fairly sizable sum of FZ and have definitely come out with a decent profit, Frozen has many of the same issues as Quark. It wasn't insta-mined, but it will be mostly mined out in just six months, which is -- in my opinion -- stupid. The security of any cryptocurrency depends on enough people mining it to keep it from being taken over, so if everyone stops mining because there's no more coins being made after just six months, security drops to basically nothing.
At the same time, I also still like the ideal of PoW algorithms that are ASIC-resistant (I'm not sure anything can be "ASIC-proof"), so things like Primecoin are cool, but again the ROI for XPM is basically dead at this point. If scrypt is going to enter the realm of the ASIC-coins in six months, what's the Next Big Thing (tm)? Well, scrypt-jane is one possibility. It's essentially scrypt with a variable n-factor, which apparently makes it even more difficult to target with a custom ASIC. There are several alt-coins now using scrypt-jane, but the latest to catch my eye is Microcoin (MRC), which is using a "fair launch" approach.
The short summary is that MRC started with 10000 blocks that had a combined value of just 1 MRC; this was used to establish a baseline difficulty for the network. From there, the next 300,000 blocks will scale up in rewards from 10,000 MRC to 160,000 MRC and then back down to 10,000 MRC. That means the peak block reward will come in the next 15-45 days, so unfortunately while the launch is "fair", we're still going to mine most of the MRC in just four months. Gah! But I've pointed at least one GPU at MinersBest to see how things develop; MRC should also hit a new exchange (red flags much?) tomorrow, at which point we'll get some idea of the value of the coin. With a target of 100 billion total coins, I suspect a fair long-term valuation of MRC is going to be around 0.0000021 BTC per MRC, and short-term it will probably be less than half that amount.
Vertcoin (VTC) is another option, which also adjusts the n-Factor using an "adaptive n-Factor" approach that's different than scrypt-jane. Other than the change in PoW, it's the same reward setup as LTC, so 50 VTC block rewards every 2.5 minutes with 84 million total coins. It's a newer coin as well, having started just this past month, and it's already listed on CoinedUp. Being listed this early isn't always a good thing, but the valuation right now is 0.00016 BTC per VTC. Considering that in total there are 28800 VTC being mined daily, that means the trade value is 4.6 BTC available per day. The network hash rate is around 183MHash/sec, and GPUs are about half as fast with the new PoW as with standard scrypt, so that means 400KHash/sec from an R9 290 would be reasonable, or 333KHash/sec from R9 280X. If we take the latter, three R9 280X should produce ~1MHash, resulting in a reward of around 0.025 BTC per day. If you were to mine LTC instead of VTC, your current daily rewards with ~2MHash/sec would only be 0.0145 BTC, making VTC about 70% more profitable than LTC mining -- not bad! With 3x7950 however, I'm only getting about 40% better than LTC mining (hash rates of around 240KHash per GPU instead of 620KHash on scrypt), so I'm not quite able to match Middlecoin's current returns.
Anyway, what I'd really like to see is more alt-coins that forget about the fast-mining hype and crazy block rewards (or silly memes, i.e. DOGE) and instead go for a long-haul approach. Take the Quark PoW -- or scrypt-jane, or some other variant -- and use scaling similar to BTC/LTC so that in two years, people are still seeing 50 coin block rewards, and in ten years you could still get 12.5 coin block rewards and have a reason to continue mining. I think the fear is that slower mining makes your coin and/or PoW algorithm a bigger target for ASICs, but faster mining just means your coin will die in six months or however long it takes to empty the coffers. QRK is still kicking, though, even with a much lower block reward, so maybe there will be enough interest to keep more coins going. I'm not convinced, unfortunately, which means long-term the best bets are still BTC and LTC.
Even GPUs are still less efficient than a processor designed specifically to run SHA256, however, and the inevitable next step was to work on FPGAs (Field Programmable Gate Arrays) and ASICs (Application Specific Integrated Circuit). FPGAs are basically a quick and dirty way to do a custom chip, with the caveat being that they'll never be as fast as a custom design -- they don't clock as high, because the gate arrays can't switch as fast. FPGAs could run about as fast as a high-end GPU back in 2011, but they cost almost twice as much -- and they used about 1/10 as much power. Custom ASICs on the other hand would take a lot more time to develop, and they would require a significant investment in terms of R&D, layout, fabrication, packaging, etc.
Eventually we started to see ASICs designed for SHA256 become widely available in early 2013, and the result has been an exponential increase in hashing power. Today, a good ASIC miner will perform around 1000GHash/sec and draw around 850W of power -- about 400X as efficient as trying to mine BTC with a GPU! The problem is that supply of ASICs hasn't kept up with demand, so there are relatively few companies/people with ASICs controlling the Bitcoin network. Worst-case, we could end up with one company controlling over 50% of the network, in which case they could basically steal BTC by forging transactions. I don't think we're likely to see that happen -- there's too much money invested into BTC at this point, and any company getting even 25% of the total hash rate will likely stop expanding so as not to spook other investors. But it still means that this "currency for the people" has ended up in the control of a relatively small number of hands, which is not what it was supposed to do.
So then we have scrypt, which is an alternate Proof of Work that can't be mined with ASICs designed for SHA256. With the success of Bitcoin and now Litecoin, however, there is plenty of interest in being the first company to deliver a scrypt ASIC. Probably the most well-known is Alpha Technologies, who are currently targeting a release date of mid-July for a 25MHash/sec scrypt ASIC that will draw less than 600W (and potentially less than 300W). To put that in perspective, it's the equivalent of 30 Radeon R9 290X GPUs but draws as much power as two such GPUs -- or roughly 15X as efficient as using a GPU. That's not quite as big of a gap as we're seeing with SHA256, since scrypt was intentionally designed to make the creation of ASICs more difficulty, but it's still a healthy advantage.
The big catch is the cost, of course. The Viper 25MHash miner has a price of £5450, or around $9000 USD. Even at the currently inflated prices on GPUs, $9000 could purchase around six complete mining rigs, each with three R9 280X GPUs, for a total hashing power of around 13MHash/sec. That's about half the performance, but you could begin hashing within a week compared to waiting six months, and six months is a very long time in the cryptocurrency world. I went in on half of a Viper with a friend, and we'll see if that works out, but I suspect it will be a while yet before that investment pays off. It will certainly be interesting to see what sort of ASIC arms race comes in the scrypt world, regardless, as Alpha Technologies is actually jumping straight to 28nm process technology whereas the SHA256 ASICs started at 110nm, so we may not actually see quite the explosion in hashing rate that Bitcoin saw.
So this brings us to the alternative Proof of Work algorithms. I really liked the idea of Quark, but it was basically insta-mined so that if you didn't hop on board in the first month or two, you were "too late" to really make a decent profit. This is why I started mining Frozen, but while I have mined a fairly sizable sum of FZ and have definitely come out with a decent profit, Frozen has many of the same issues as Quark. It wasn't insta-mined, but it will be mostly mined out in just six months, which is -- in my opinion -- stupid. The security of any cryptocurrency depends on enough people mining it to keep it from being taken over, so if everyone stops mining because there's no more coins being made after just six months, security drops to basically nothing.
At the same time, I also still like the ideal of PoW algorithms that are ASIC-resistant (I'm not sure anything can be "ASIC-proof"), so things like Primecoin are cool, but again the ROI for XPM is basically dead at this point. If scrypt is going to enter the realm of the ASIC-coins in six months, what's the Next Big Thing (tm)? Well, scrypt-jane is one possibility. It's essentially scrypt with a variable n-factor, which apparently makes it even more difficult to target with a custom ASIC. There are several alt-coins now using scrypt-jane, but the latest to catch my eye is Microcoin (MRC), which is using a "fair launch" approach.
The short summary is that MRC started with 10000 blocks that had a combined value of just 1 MRC; this was used to establish a baseline difficulty for the network. From there, the next 300,000 blocks will scale up in rewards from 10,000 MRC to 160,000 MRC and then back down to 10,000 MRC. That means the peak block reward will come in the next 15-45 days, so unfortunately while the launch is "fair", we're still going to mine most of the MRC in just four months. Gah! But I've pointed at least one GPU at MinersBest to see how things develop; MRC should also hit a new exchange (red flags much?) tomorrow, at which point we'll get some idea of the value of the coin. With a target of 100 billion total coins, I suspect a fair long-term valuation of MRC is going to be around 0.0000021 BTC per MRC, and short-term it will probably be less than half that amount.
Vertcoin (VTC) is another option, which also adjusts the n-Factor using an "adaptive n-Factor" approach that's different than scrypt-jane. Other than the change in PoW, it's the same reward setup as LTC, so 50 VTC block rewards every 2.5 minutes with 84 million total coins. It's a newer coin as well, having started just this past month, and it's already listed on CoinedUp. Being listed this early isn't always a good thing, but the valuation right now is 0.00016 BTC per VTC. Considering that in total there are 28800 VTC being mined daily, that means the trade value is 4.6 BTC available per day. The network hash rate is around 183MHash/sec, and GPUs are about half as fast with the new PoW as with standard scrypt, so that means 400KHash/sec from an R9 290 would be reasonable, or 333KHash/sec from R9 280X. If we take the latter, three R9 280X should produce ~1MHash, resulting in a reward of around 0.025 BTC per day. If you were to mine LTC instead of VTC, your current daily rewards with ~2MHash/sec would only be 0.0145 BTC, making VTC about 70% more profitable than LTC mining -- not bad! With 3x7950 however, I'm only getting about 40% better than LTC mining (hash rates of around 240KHash per GPU instead of 620KHash on scrypt), so I'm not quite able to match Middlecoin's current returns.
Anyway, what I'd really like to see is more alt-coins that forget about the fast-mining hype and crazy block rewards (or silly memes, i.e. DOGE) and instead go for a long-haul approach. Take the Quark PoW -- or scrypt-jane, or some other variant -- and use scaling similar to BTC/LTC so that in two years, people are still seeing 50 coin block rewards, and in ten years you could still get 12.5 coin block rewards and have a reason to continue mining. I think the fear is that slower mining makes your coin and/or PoW algorithm a bigger target for ASICs, but faster mining just means your coin will die in six months or however long it takes to empty the coffers. QRK is still kicking, though, even with a much lower block reward, so maybe there will be enough interest to keep more coins going. I'm not convinced, unfortunately, which means long-term the best bets are still BTC and LTC.
NVIDIA Scrypt GPU Mining Performance with CUDAminer
Everyone "knows" that AMD GPUs are best for mining the various cryptocurrencies, and the conventional wisdom is that NVIDIA GPUs aren't worth the cost or the trouble. While this may be true from a pure performance perspective, if you already own such a GPU, the December update to CUDAminer actually delivered a pretty substantial boost in performance. To be clear, we're still only talking about roughly half the performance of AMD's similarly priced hardware, but there are other reasons to go with NVIDIA GPUs -- gaming and general computational programming are both strong areas for NVIDIA.
And it's not just about games; if you're looking for a PC that can still be used for other non-GPU-intensive tasks while mining, CUDAminer tends to be far less taxing in my experience (similar to high-end AMD GPUs at intensity 13). Noise levels also tend to be much better (quieter), and stability is also good. So if you have an NVIDIA GPU, what settings should you use and what sort of performance can you expect as a result?
Let's start with the settings. I'm going to focus mostly on Kepler-based cards, but Fermi cards may also work reasonably well. The key flag to use in order to generally get optimal scrypt hashing performance is the -l flag (--launch-config), where you can specify the architecture to use for the GPU. CUDAminer will try to find the "best" solution on its own, but you can usually get better results and faster startup times by using -l. There are six options: L (Legacy), F (Fermi), K (Kepler), T (Titan Kepler), S (a variant of the Kepler core), and X (experimental Titan). I didn't even look into using L/F/S flags, as it's generally agreed now that the GPUs that require those configurations won't run all that well.
As for the remaining options, T/X require Compute 3.5 cards based on GK110, which means GeForce GTX 780/780 Ti or GeForce GTX Titan. We can again safely skip Titan -- performance is roughly between the 780 and the 780 Ti, but the cost is currently well over $1000 -- which leaves the $500 (give or take) GTX 780 and the $700 GTX 780 Ti. If you have a non-GK110 chip, you can still get reasonable performance as well, and since I have a GTX 770 I ran some tests on that as well. The basic rule is this: every SMX unit in Kepler (and Titan/GK110) has 192 cores, so take your CUDA cores and divide it by 192 to find out what your configuration should be. Here's what you can expect (without playing with overclocking):
GTX 770: ~330 KHash @ 200W (-l K8x32)
GTX 780: ~510 KHash @ 250W (-l T12x32)
GTX Titan: ~570 KHash @ 250W (-l T14x32)
GTX 780 Ti: ~580 KHash @ 260W (-l T15x32)
GT 750M: ~75 KHash @ 35W (-l K2x32) (Note: this is a notebook)
GTX 760M: ~110 KHash @ 45W (-l K4x32) (Note: this is a notebook)
GTX 780M: ~240 KHash @ 100W (-l K8x32) (Note: this is a notebook)
Again, there's obviously no reason right now to go out and buy a ton of NVIDIA GPUs to run CUDAminer, but if you already have those GPUs around -- or if you're more interested in gaming and you just want to run CUDAminer when the PC isn't otherwise being used -- the GTX 780 should still generate a return of roughly $90 per month (after power costs). The GTX 770 actually has some rebates going on right now that can bring the price down to just $320, so basically we're looking at half the performance of AMD's equivalently price GPUs. That may sound bad, but prior to the December update to CUDAminer, it was more like one fourth the performance.
And it's not just about games; if you're looking for a PC that can still be used for other non-GPU-intensive tasks while mining, CUDAminer tends to be far less taxing in my experience (similar to high-end AMD GPUs at intensity 13). Noise levels also tend to be much better (quieter), and stability is also good. So if you have an NVIDIA GPU, what settings should you use and what sort of performance can you expect as a result?
Let's start with the settings. I'm going to focus mostly on Kepler-based cards, but Fermi cards may also work reasonably well. The key flag to use in order to generally get optimal scrypt hashing performance is the -l flag (--launch-config), where you can specify the architecture to use for the GPU. CUDAminer will try to find the "best" solution on its own, but you can usually get better results and faster startup times by using -l. There are six options: L (Legacy), F (Fermi), K (Kepler), T (Titan Kepler), S (a variant of the Kepler core), and X (experimental Titan). I didn't even look into using L/F/S flags, as it's generally agreed now that the GPUs that require those configurations won't run all that well.
As for the remaining options, T/X require Compute 3.5 cards based on GK110, which means GeForce GTX 780/780 Ti or GeForce GTX Titan. We can again safely skip Titan -- performance is roughly between the 780 and the 780 Ti, but the cost is currently well over $1000 -- which leaves the $500 (give or take) GTX 780 and the $700 GTX 780 Ti. If you have a non-GK110 chip, you can still get reasonable performance as well, and since I have a GTX 770 I ran some tests on that as well. The basic rule is this: every SMX unit in Kepler (and Titan/GK110) has 192 cores, so take your CUDA cores and divide it by 192 to find out what your configuration should be. Here's what you can expect (without playing with overclocking):
GTX 770: ~330 KHash @ 200W (-l K8x32)
GTX 780: ~510 KHash @ 250W (-l T12x32)
GTX Titan: ~570 KHash @ 250W (-l T14x32)
GTX 780 Ti: ~580 KHash @ 260W (-l T15x32)
GT 750M: ~75 KHash @ 35W (-l K2x32) (Note: this is a notebook)
GTX 760M: ~110 KHash @ 45W (-l K4x32) (Note: this is a notebook)
GTX 780M: ~240 KHash @ 100W (-l K8x32) (Note: this is a notebook)
Again, there's obviously no reason right now to go out and buy a ton of NVIDIA GPUs to run CUDAminer, but if you already have those GPUs around -- or if you're more interested in gaming and you just want to run CUDAminer when the PC isn't otherwise being used -- the GTX 780 should still generate a return of roughly $90 per month (after power costs). The GTX 770 actually has some rebates going on right now that can bring the price down to just $320, so basically we're looking at half the performance of AMD's equivalently price GPUs. That may sound bad, but prior to the December update to CUDAminer, it was more like one fourth the performance.
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